CHINA Oilfield Services Ltd, a unit of the nation's third-largest oil company, has won permission from the stock market regulator for a share sale in Shanghai that may raise US$1.53 billion.

China Oilfield, listed in Hong Kong since November 2002, can proceed with plans to sell yuan-denominated A shares, the China Securities Regulatory Commission said in a statement posted on its Website yesterday. It gave no further details.

Shares in the Chinese mainland trade at 52 times earnings, compared with 16 for members of Hong Kong's benchmark Hang Seng index. China Oilfield, whose biggest customer is CNOOC Ltd, the nation's largest offshore oil producer, plans to increase spending to expand and benefit from demand for drilling services.

The Beijing-based company said in March that it will use proceeds from the sale of as many as 820 million shares in Shanghai to buy ships and drilling equipment to help boost revenue from outside China.

The Hong Kong stock has more than doubled this year, making it the best-performer among the 39 members of the Bloomberg World Oil & Gas Services Index. China Oilfield shares fell 4.6 percent to HK$14.50 (US$1.86) in Hong Kong yesterday, indicating that the sale may raise as much as 11.49 billion yuan (US$1.53 billion). The company hasn't given a price for the A shares.

The Shanghai share sale would represent no more than 17.03 percent of the company's total shares, China Oilfield said in a prospectus posted on the regulator's Website. CNOOC and China Oilfield are both units of China National Offshore Oil Corp.

Capital spending may run at between 3.5 billion yuan and four billion yuan a year between 2008 and 2010 as China Oilfield expands capacity, it said earlier. Profit in 2007 may jump more than 60 percent to 1.83 billion yuan on sales of 8.71 billion yuan, according to the prospectus. Profit was 1.13 billion yuan on sales of 6.53 billion yuan in 2006, it said.