Sinopec Said to Eye Takeover of Kurdistan’s Gulf Keystone
(Bloomberg) -- China Petroleum & Chemical Corp., the world’s biggest refiner, is weighing a takeover of beleaguered Kurdish oil producer Gulf Keystone Petroleum Ltd., people familiar with the matter said.
The state-owned oil giant, known as Sinopec, is working with advisers and has made an approach to Gulf Keystone, said the people, who asked not to be named because the deliberations are private. The company may also attract other bidders, they said. No final decisions have been made and any talks may not lead to a deal, the people said.
Representatives for Gulf Keystone and Sinopec declined to comment.
Gulf Keystone rose 13 percent to 143 pence in London trading at 10:42 a.m. Tuesday, giving the company a market value of 328.1 million pounds ($416.7 million). The shares earlier rose as much as 16 percent, the biggest intraday gain since October.
Gulf Keystone, which operates in the Kurdish region of Iraq, was taken over by creditors in September after missing a bond payment and was forced to restructure its debt. The company has struggled with a drop in the value of crude and has also had difficulties extracting payments from the Kurdish regional government amid its war with the Islamic State.
DNO ASA, another oil explorer in the region, offered $300 million for Gulf Keystone in July. Gulf Keystone said that it wouldn’t engage in talks with DNO and would instead focus on completing its debt restructuring. Gulf Keystone had a market capitalization of as much as 3.6 billion pounds in February 2012 when Brent oil was trading near $120 a barrel.
Oil jumped to the highest since July 2015 on Monday after Saudi Arabia signaled it’s ready to cut output more than it had agreed to earlier and other, non-OPEC countries, including Russia, pledged to cut production next year. The moves will tighten a supply glut that’s depressed prices for the last two years.
Sinopec is weighing buying overseas assets and stakes in projects again after shutting production at older, high-cost fields to help the company weather the collapse in oil prices, Chairman Wang Yupu said in August.
The Chinese company has an existing presence in Kurdistan through its 2009 acquisition of Addax Petroleum Corp. Addax operates the Taq Taq field in Iraq in partnership with Genel Energy Plc.