Chinese oil giant Sinopec mulls buying Gulf Keystone Petroleum

Chinese oil giant China Petrochemical Corp, better known as Sinopec, is mulling acquiring Kurdistan (Iraq)-focused oil explorer Gulf Keystone Petroleum, Bloomberg today reported citing sources familiar with the matter.

The report also said that London Stock Exchange-listed Gulf Keystone could attract other bidders.

Gulf Keystone, which produces about 40,000 barrels a day from its Shaikan oil field in Kurdistan, has been struggling with a debt of £459 million following the crash of global oil prices.

In July, Norwegian energy firm and Kurdish oil producer DNO ASA offered to buy Gulf Keystone for $300 million, but withdrew its offer after Gulf Keystone failed to meet certain conditions related to its financial restructuring.

In September, it arrived at an agreement with its creditors to swap more than £381 million of debt for a major stake, reducing its debt to £76.5million, but the deal that left its investors with a meager five per cent stake in the company, but gave bondholders a majority stake.

Gulf Keystone has been crippled by late payments from the Kurdish Regional Government and its debt pile became harder to service as oil prices fell from more than $110 per barrel in the middle of 2014 to less than $40 at the end of last year.

Its market value has crashed to about £290 million from its peak valuation of £3.5 billion in February 2012, according to Reuter's calculations.