"I can confirm that this transaction is subject to review under the Investment Canada Act," Industry Minister Tony Clement said, noting that PetroChina "must obtain my approval prior to implementing the investment."

"I only approve an application where an investment demonstrates it is likely to be of net benefit to Canada."

If the deal goes through, PetroChina would acquire a 50-percent stake in the Cutbank Ridge fields in British Columbia and Alberta.

Under the terms of the deal, PetroChina and Encana would jointly develop the 635,000-acre (256,975-hectare) spread with current daily production of 255 million cubic feet (7.22 million cubic meters) of natural gas equivalent.

Encana said the fields have proven reserves of about one trillion cubic feet (28.3 billion cubic meters) of natural gas equivalent.

The deal, announced Wednesday by Encana, is the latest investment by China's top oil producer in Canada as the energy-guzzling nation scours the world for natural resources needed to fuel its fast-growing economy.

The deal has to be approved by Chinese regulatory authorities, and aspects of the agreement still have to be negotiated, Encana said.

Canada last year rejected a $39-billion takeover of Potash Corp by Australia's BHP Billiton on grounds that the Canadian company was a strategic interest to Canada and its sale was unlikely to benefit the country.

But that was a hostile takeover bid, and as a joint venture the deal with China may be less controversial.