China Petrochemical Corp (Sinopec), the country's largest refiner, was in talks to buy more than US$1 billion of assets from Afren, people with knowledge of the matter said.
Sinopec was interested in Afren assets, including those in Nigeria, one of the people said.
Afren, which also operates in the Kurdistan region of Iraq and other parts of Africa, said in November that it was approached to sell stakes in its assets, without elaborating on the identity of the potential buyers.
Seeking to meet demand in the world's second-largest economy, China's state-backed firms bought a record US$29 billion of energy assets abroad last year, data compiled by Bloomberg shows.
Sinopec agreed to buy a 20 per cent stake in an offshore Nigerian field from French explorer Total for about US$2.5 billion in November.
Afren rose 10.6 pence, or 7.4 per cent, to close at 157 pence in London on Friday, valuing the company at £1.7 billion (HK$20.69 billion).
Sinopec spokesman Lv Dapeng did not answer calls to his office seeking comment. An Afren official declined to comment.
Afren had US$1.8 billion of assets in Nigeria at the end of 2011, and generated 92 per cent of its US$597 million in sales there that year, data shows. Revenue probably more than doubled to about US$1.5 billion last year, Afren said late last month.