Two Chinese oil giants Cnooc Ltd. (CEO) and China Petrochemical Corp., known as Sinopec Group, are seeking bank loans of around US$4.5 billion from the Hong Kong market to fund their announced overseas acquisitions, turning to the offshore loan market amid tightening liquidity at home, people familiar with the situation said Thursday.

Chinese state-owned oil companies have been considered as cash-rich when making landmark overseas acquisitions due to their access to financing from China 's domestic banks.

However, credit control measures introduced by the central government earlier this year as China moves to tighten liquidity, and cheaper funding costs in Hong Kong are driving Chinese companies to the Hong Kong loan market.

"The funding cost for U.S. dollar loans for a top credit client is now in between 80-150 basis points in Hong Kong, while Chinese banks now ask for at least 300 basis points for U.S. dollar onshore loans in China," one of the people said.

Cnooc, China's largest offshore oil and gas producer by capacity, is sounding out banks in Hong Kong for loans of up to US$1.5 billion to fund the recent takeover of Pan American Energy LLC by its joint venture Bridas Corp., two people familiar with the situation said.

Cnooc said last month that Bridas Corp., a 50-50 joint venture between the Beijing-based oil company's international arm and Bridas Energy Holdings, agreed to buy the 60% stake in Pan American Energy that it doesn't already own from BP PLC for US$7.06 billion to take full ownership of Pan American and bolster its presence in South America .

Separately, Asia 's biggest refiner Sinopec Group is now looking for an offshore long-term loan of at least US$3 billion to refinance short-term debt, one of these people said.

Sinopec Group got around US$4 billion in short-term bilateral loans from a couple of international banks for its US$4.65-billion acquisition of a stake in the Syncrude Canada Ltd. oil sands project in June, the person said.

The two companies are in talks with Chinese, Japanese and some European banks, the people said without elaborating. Cnooc and Sinopec Group declined to comment.

Mounting speculation that the yuan will appreciate further has also contributed to tightened onshore U.S. dollar liquidity in China .

"Individuals and companies don't want to keep U.S. dollar deposits and would like to convert them into yuan, and at the same time, they would like to obtain U.S. dollar loans, leading to the scarcity of the U.S. dollar in the market," another person familiar with the situation said.

"It's a test to the appetite of the Hong Kong loan market as state-owned companies normally ask for low interest margin without pledging assets as collateral, given their strong bargaining power," one of the people said.

For instance, Cnooc is looking for a five-year loan at an interest rate of around 150 basis points, while Sinopec is looking for a five-to seven-year loan with an interest rate below 200 basis points, people familiar with the situation said.

China 's oil giants are stepping up investment in overseas oil assets as the Chinese government encourages state-owned oil companies to buy assets abroad to secure energy for its booming economy.

China 's economic recovery is keeping energy demand and oil prices high, driving earnings growth that will help Cnooc and Sinopec Group fund their ambitious plans to raise both output and reserves.

The International Energy Agency now forecasts 2011 year-on-year global oil demand growth of 1.3 million barrels a day, compared with the 2010 rise of 2.5 million barrels, partly driven by strong growth in China .

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