UPDATE 2-Verenex agrees to Libya offer as China sale blocked

* Verenex accepts Libya's C$7.09 a share offer

* Compensation for working capital could add C$0.15 share

* Approval of 75 percent of Verenex shares needed

* Shares rise 3 percent

(Adds details, analyst comment)

By Scott Haggett and Alex Lawler

CALGARY, Alberta/LONDON, Nov 5 (Reuters) - Verenex Energy Inc (VNX.TO) confirmed on Thursday it agreed to be bought by a Libyan sovereign wealth fund for at least C$316.8 million ($299 million), ending a months-long battle in which the Libyans blocked a better offer from China.

The Verenex dispute highlighted the determination across resource-holding countries to maximise their own returns from oil and gas, as well as the risks for foreign investors in Libya, holder of Africa's largest oil reserves.

Analysts thought both sides would welcome an end to the saga, which started in February when China National Petroleum Corp [CNPET.UL] bid C$499 million including debt for Verenex. Libya blocked the bid, offering later to buy the firm for the lower price.

"It is probably good for the company and Libya to get some closure of this saga by now," said Samuel Ciszuk, analyst at IHS Global Insight.

"Verenex was clearly left in a situation where it had little choice but to accept the offer Libya gave it, hence the deal is unlikely to fall through on Verenex's side."

Under the terms, the Libya Investment Authority (LIA) will pay C$7.09 a share for Verenex, in line with its original offer made in September, Verenex said in a statement. Shares of Verenex rose around 3 percent to C$7.03 in Toronto.

Verenex said the LIA had also agreed to compensate its shareholders for the company's working capital, an amount it expects will add at least another 15 Canadian cents to the C$7.09 per share offer.

The parties had until Nov. 6 to reach the definitive agreement and last month had postponed the deadline while negotiations continued.

NO WIN FOR INVESTORS