The two have been in talks since the summer over BP’s 60 per cent stake in the Argentinian company, with CNOOC emerging as the most interested buyer.
CNOOC already owns 20 per cent of Pan American, which is the country’s second largest oil producer.
A spokesperson for BP declined to comment on the deal but said the group was in the middle of a major divestment programme.
Earlier this year, BP announced its intentions to offload a raft of assets to help fund the mammoth bill it faces from the Gulf of Mexico oil spill.
Clean-up alone has already come to £7.1bn and it has also committed to setting up a £12.5bn compensation fund.
The group is understood to hold more than £200bn in assets, but it plans to sell around 10 per cent of these by the middle of next year.