Afren shares leap as Sinopec said to eye $1bn assets

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Oil producer Afren (LSE: AFR.L - news) leapt to the top of the FTSE 250 (FTSE: ^FTMC - news) in late trading on Friday after reports that Chinese giant Sinopec was in talks to buy more than $1bn (£636m) of assets from the company.

Sinopec is interested in Afren’s Nigerian assets, Bloomberg reported, sending shares up sharply to close more than 7pc higher at 154p, valuing the company at £1.7bn.

Afren has long been seen as a possible takeover target and in November (Xetra: A0Z24E - news) stoked rumours of a deal for some of its assets when chief executive Osman Shahenshah said it had had several discussions with possible partners, without giving further details.

At the time he said there were no plans to sell the entire company.

Afren’s main producing assets are in Nigeria although it also has exploration and production assets elsewhere in Africa and in Kurdistan.

The company’s stock had surged late last month when Sinopec had been rumoured as a possible bidder, alongside other names including ExxonMobil and Glencore, but fell back amid claims the speculation was unfounded.

China has been rapidly expanding its international oil and gas portfolio as it seeks to meet rising energy demand. State-controlled CNOOC (HKSE: 0883.HK - news) is close to completing a controversial $15bn takeover of Canadian energy producer Nexen (KSE: 005720.KS - news) , which is the second biggest oil producer in the UK North Sea.

Meanwhile Sinopec spent $1.5bn on a 49pc stake in the UK unit of Canada’s Talisman Energy (Toronto: TLM.TO - news) . The two deals, which were both announced on the same day last July, give China access to more than 8pc of the UK’s oil and gas production.

Afren declined to comment. Sinopec could not be reached for comment.