HONG KONG (

TheStreet

) --

China National Petroleum

and

Cnooc

(CEO) - Get Report

have proposed paying at least $17 billion for all of

Repsol YPF's

( REP) stake in its Argentine unit

YPF

(YPF) - Get Report

, the

Wall Street Journal

reports, citing two people close to the talks.

The potential deal could be the biggest overseas investment by China, the

Journal

notes. But the transaction faces significant hurdles and could be politically sensitive in Argentina, where YPF is the country's leader in both upstream operations and downstream operations.

The Argentine government holds no financial stake in YPF, but has the right to veto decisions such as a transfer of ownership, according to the

Journal

.

China National Petroleum, China's biggest state-owned oil firm, believes it would be able to resolve any political or consumer objections to a potential deal, one of the people close to the talks said, the newspaper reports. Cnooc is China's biggest offshore oil and gas producer.

Spain also could object to seeing some key assets of Repsol, the country's largest oil company, purchased by China, the

Journal

adds.

-- Reported by Joseph Woelfel in New York

.