Chinese state-owned oil companies are facing unprecedented challenges in their drive for overseas expansion and need to ramp up mergers and acquisitions activity rather than rely on buying foreign oil concessions, China Daily reported Tuesday, citing a senior lawmaker and former top manager at one of the companies.

"It is now a good time to launch mergers and acquisitions overseas," said Chen Geng, a deputy at the National People's Congress, which is now in session, and former general manager of the country's largest oil company, China National Petroleum Corp.

"It will be much more difficult for the oil giants to take the traditional investment model purchasing oil concessions in the coming years," said Chen.

Both geopolitical and economic risks have surged recently, a situation China hasn't encountered in recent decades, and have slowed the oil companies' pace of expansion overseas, he said.

In 2011, the total mergers and acquisition value of China's three biggest oil companies--CNPC, China Petrochemical Corp. or Sinopec, and China National Offshore Oil Corp.--reached about $20 billion, the paper said, citing CNPC's Economics and Technology Research Institute.

The paper also quoted a CNPC researcher as saying the overseas equity-based oil output of Chinese companies was 90 million tons last year, or 1.8 million barrels a day, 20 million tons more than in 2010.