Verenex Energy has said its agreement to be bought by China for $460 million remained in effect and talks to resolve its impasse with Libyan authorities continue.

The small Canadian oil producer focused on Libya agreed in February to be bought by China National Petroleum Corp (CNPC).

Neither party has ended the deal, even though its outside date fell on Monday, Verenex said.

"Verenex and Libyan authorities are presently fully engaged in discussions to reach an amicable solution to the current impasse on the sale of Verenex without Verenex having to pursue its legal remedies," it said.

The dispute highlights both China's challenge in securing energy resources and the potential risks for Western firms in Libya. Oil companies have headed to the country, holder of Africa's largest oil reserves, since most international sanctions were lifted in 2004.

Verenex was seeking Libyan consent by August 24 for the Chinese C$10-a-share ($9.22) deal. While Libya had said it will pre-empt the bid, it has not made a formal offer and has not given consent to China.

The Verenex statement added that Libya's General People's Committee has made clear to Verenex it was seeking to negotiate a reduced price. Verenex shares nonetheless rose, trading up 4.6 per cent at C$7.53 as of 1659 GMT.

Tuesday's statement suggests Verenex may still be sold, according to one investor in the company who declined to be identified by name.

"The stock is up because a reduced price is better than no price," the investor said. "From the Chinese perspective, how do you compete with Libya to get approval?"

Verenex also said it has finalized and is ready to file an arbitration claim should it become necessary to pursue this legal remedy.

China, the world's second-largest oil consumer, is seeking energy resources to feed its growing economy. Verenex holds promising oil assets in Libya, where it has drilled 21 wells with a 95 percent success rate.

Shokri Ghanem, the chairman of Libya's National Oil Corporation (NOC), has repeatedly said the NOC will match the CNPC offer. He could not be reached on Tuesday (August 25).

With the assumption of debt, the offer from CNPC for Verenex was worth C$499 million (about $460 million), the companies said when it was announced on February 26. – Reuters