China National Petroleum Corp (CNPC), the country's biggest oil producer, is in talks with Ecuador's government over a potential investment in the OPEC-member's US-$12.5 billion Pacifico refinery project, an Ecuadorean minister said on Thursday.

Chinese state oil firms have been on a spending spree to buy overseas oil and gas assets to secure supply to the world's second-largest oil consumer and maximise returns on oil produced overseas.

The Pacifico refinery complex is a joint venture between state-run Petroecuador and Venezuela's state oil company PDVSA. It is slated to begin production in late 2015.

"CNPC could become a shareholder ... our challenge is to find a shareholder. We hope to reach an agreement with them, but if it doesn't happen, we will look for another partner. Other companies are interested," Ecuador's minister for strategic sectors Jorge Glas said on the sidelines of a mining conference.

The 300,000 barrel-per-day refinery is intended to cut domestic fuel costs for Ecuador, which has to import oil products because of low refining capacity.

Glas said Ecuador was looking for a partner for the project that would provide capital and know-how. He said negotiations with CNPC were advancing at a good pace, but that it was too early to say how much the company might invest.

CNPC has asked Industrial and Commercial Bank of China (ICBC) , the country's largest lender, to provide financing for its potential investment in the refinery and petrochemical project, a Chinese industry source familiar with the matter told Reuters.

"The negotiations are still underway," said the source, referring to CNPC's talks to invest in the refinery and ICBC's plan to help finance the project. The source asked not be named since they were not authorised to comment publicly on the issue.

A CNPC spokesman in Beijing said he could not comment, while ICBC was not available for comment. Media reports in April said that the Ecuadorian government was inviting CNPC and ICBC to help build and finance the project.

After excluding itself from debt markets by defaulting on $3.2 billion in global bonds three years ago, Ecuador has met funding needs with bilateral credit deals, mostly from China.

Total debt commitments to China amount to some $7.3 billion, including loans, advance payments for oil sales, and energy project financing.

Overseas investment

Chinese oil giants, suffering heavy refining losses at home due to state-control of oil products prices, are pushing into the overseas refining sector to maximise the value of crude they produce overseas, energy bankers and analysts say.

PetroChina, the flagship listed unit of CNPC, is in talks to buy Valero Energy's shuttered refinery in Aruba, and PetroChina has reached a deal with PDVSA to supply the Aruba plant with heavy crude, sources told Reuters in May.

PetroChina bought a 50% stake in chemical group Ineos' European refining business last year for $1 billion, its third overseas refinery deal after acquisitions in Singapore and Japan for more than $2 billion combined.

A source close to CNPC was unaware of CNPC's plan on the refinery project but told Reuters the group was currently seeking to expand its investment in Ecuador's oil exploration and production industry.

CNPC started talks earlier this year to invest in more oil exploration blocks and reserves in the Latin American country, the source said.

CNPC and other Chinese state oil firms including Sinopec Group and Sinochem already own crude oil producing assets in Ecuador, with CNPC and Sinopec jointly acquiring oil assets there from Canadian oil company Encana in 2005 for nearly $1.5 billion.

Ecuador produces around 500,000 barrels of crude oil a day and sends part of its exports to China.