South Korea's Korea National Oil Corp (KNOC) agreed to buy Canada's Harvest Energy Trust for C$1.8 billion ($1.7 billion), the Canadian company said on Wednesday.

KNOC will pay C$10 for every Harvest unit, representing a 37 percent premium over Wednesday's closing price of C$7.30.

South Korea's state-run oil company will also assume C$2.3 billion of debt in the deal, Harvest said.

Harvest produces oil and gas in western Canada and operates a 115,000-barrel-a-day refinery in Newfoundland and Labrador. The trust had planned a C$2 billion project to expand that plant but was forced it to shelve that plan during the credit crunch late last year.

The deal is subject to court and regulatory approval, and it requires approval by two-thirds of Harvest's unitholders represented voting on the deal.

Harvest's board said it plans to vote the 7 million units it holds in favor of the deal. Harvest has 180.6 million units outstanding, according to Reuters data.

KNOC said earlier this month that it was eyeing five to ten oil companies overseas for a possible acquisition. The company made an earlier foray into Canada in 2006, buying an oil sands project from gold producer Newmont Mining Corp for $270 million.

($1=$1.04 Canadian)

(Reporting by Michael Erman; Editing by Gary Hill)