SAGA Petroleum, Norway's largest independent explorer, has won the auction of Santa Fe Exploration, the Kuwaiti owned North Sea oil company, for $1.23 billion (£732 million).

Santa Fe's exploration portfolio includes interests in 45 blocks in British waters and 20 blocks on the Irish continental shelf. It is the second Norwegian company to make a British North Sea acquisition, driven in large part by the desire to build up a presence in new deep water exploration areas along the Atlantic margin.

Shares in Saga were suspended on the Oslo Bourse yesterday afternoon in anticipation a formal announcement this morning. Saga's corporate assembly of directors, shareholders, union representatives and government officials, was due to meet last night to give the final go ahead to the deal.

Saga is expected to finance the acquisition through retained earnings and existing borrowing facilities, and will not need to make a rights issue, according to advisers.

The auction of Santa Fe, a wholly owned subsidiary of the state owned Kuwait Petroleum Corporation, drew numerous bids from international oil companies. The bid by Conoco, the oil subsidiary of thee DuPont chemical company of the US, was said to have been "very close" to that of Saga.

Kuwait bought Santa Fein the early 1980s as part of a controversial diversification strategy.

The acquisition will giving a substantial position in the British oil industry, especially in new areas now being opened to exploration west of the Shetland Islands and off the west coast of Ireland.

Saga's purchase of Santa Fe will boost its oil production from 50,000 barrels a day to 190,000. Santa Fe has stakes in six producing oil fields, including Miller, Alba and Gryphon. It also has a 9 per cent interest in Britannia, the largest gas field being developed in Britain.