China National Petroleum Corp., the country's biggest energy producer, offered to buy a stake in Woodside Petroleum Ltd.'s Browse gas project in Western Australia, two people with knowledge of the matter said.

The state-controlled company, known as CNPC, made a binding bid for as much as 15 percent of the venture comprising two natural gas areas, one of the people said, asking not to be identified as the sale process is confidential. The stake may be worth up to $1.5 billion, based on estimates from Citigroup Inc.

China, the world's second-biggest crude consumer, is stepping up efforts to buy oil and gas fields overseas and build pipelines to feed an economy that the government aims to grow 7 percent annually between 2011 and 2015. CNPC is the only Chinese company seeking a stake in the Browse development, and it faces competition from bidders from Japan, Taiwan and South Korea, the people said.

Woodside's discussions to sell part of its Browse holding are "maturing," Chief Executive Officer Peter Coleman said today on a call with analysts. "The interest has been strong I can say, and we'll know over the next few months exactly what we're doing in that space."

Liu Weijiang, a Beijing-based spokesman at CNPC, said he was unaware of any deal with Woodside, declining to comment further. Woodside's media department didn't immediately respond to phone calls seeking comment.

Mitsui Interest

Woodside today increased the estimate for its natural gas resources in the Browse Basin by 17 percent to 15.5 trillion cubic feet (439 billion cubic meters), according to a presentation from the Perth-based company. Woodside owns 46 percent of the project.

Coleman said in August the company may sell stakes in its Browse and Pluto liquefied natural gas ventures to help fund the developments. Browse may cost $36 billion to build, compared with an earlier estimate of $30 billion, Credit Suisse Group AG said in November.

CPC Corp., Taiwan's state-owned oil refiner, said Feb. 8 that it is in talks with Woodside to buy a stake of less than 10 percent in Browse and is negotiating details of an LNG supply agreement. Mitsui & Co. is also interested in buying a stake in the venture, according to a spokesman for the Japanese trading company.

Size of Stake

Woodside, Australia's second-largest oil producer, has said it's received interest from potential buyers of a minority stake in Browse, without identifying them. The company said today it expects a final investment decision on Browse in the first half of 2013.

The Australian company may fetch $1.6 billion selling 16 percent of Browse and lowering its holding to 30 percent, Citigroup estimated on Jan. 27.

"Woodside's 46 percent interest in the Browse resource is valuable, despite ongoing challenges with the project," Mark Greenwood, a Sydney-based Citigroup analyst, wrote in the January report.

Woodside's Coleman declined to say how much of the venture the company may sell. That's "the question everybody would like to know," he said on the call today. "We have a firm view on it. We know what that number is, but I don't think it's appropriate to share."

Chevron Corp., Royal Dutch Shell Plc, BP Plc and BHP Billiton Ltd. are the other partners in Browse.

Chinese Demand

CNPC aims to increase its overseas oil and gas production to 200 million metric tons by the end of 2015 from more than 100 million tons last year. The company has operations in countries including Venezuela, Peru and Ecuador.

"CNPC would be interested in Australia because of its political stability and because of its experience in exporting LNG to China," said Gordon Kwan, head of regional energy research at Mirae Asset Securities Ltd. in Hong Kong.

China buys the bulk of its LNG under multi-year contracts from Indonesia, Malaysia, Qatar and Australia. LNG is natural gas chilled to liquid form, reducing its volume for shipping to destinations not connected by pipeline.

PetroChina Co., its Hong Kong-listed unit, plans to spend at least $60 billion this decade on global acquisitions to build oil and gas reserves and meet domestic demand. China, the world's biggest energy user, is seeking to triple the use of gas by 2020 to about 10 percent of total consumption to reduce reliance on more polluting coal and oil.