The new yuan-denominated shares to be offered on the Shanghai Stock Exchange represent 17 percent of COSL's enlarged share capital. COSL stock closed 5.5 percent higher at HK$6.11 yesterday.

The Shanghai initial public offering has been approved by the company's board, which will convene a shareholders meeting in June to approve the sale before submitting the plan to the China Securities Regulatory Commission, COSL told the Hong Kong Stock Exchange yesterday.

Most of the proceeds from the stock issue will be used for building vessels and drilling and exploration equipment, with the balance earmarked as general working capital, it said.

COSL is the oil service unit of China National Offshore Oil Corp, which is also the parent of Hong Kong-listed CNOOC Ltd, its key oil exploration subsidiary, and China BlueChemical Ltd, its chemical arm.

If the Shanghai sale proceeds as planned, COSL would become the first China National unit to conduct a mainland listing, though CNOOC and China BlueChemical have also signaled their intention to issue A shares.

COSL will increase capital expenditures 18 percent this year to 3.2 billion yuan (US$415 million), it said last Friday while reporting 2006 earnings.

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