Chinese state-owned PetroChina is looking to take a 20% stake in Australian-listed African Petroleum Corp. in a multi-million dollar deal that would mark China's debut in West African oil and gas.

African Petroleum's non-executive deputy chairman Antony Sage told Platts Tuesday: "PetroChina approached the company for an investment. We've had discussions with them over the last few months and we've signed a non-binding MOU but they've only got seven weeks [to] finalize their due diligence and hopefully we will be able to give them up to 20% equity in the company."

"We don't necessarily need their money but a partnership with a firm like theirs would be invaluable to our company, as well as them getting access to one of the world's fastest growing oil and gas regions," he added.

African Petroleum announced Monday that it had entered a memorandum of understanding with PetroChina giving the latter the option to take up to a 20% stake in its West African blocks. PetroChina has until end August to make its decision.

Sage said this would be the first Chinese investment in West Africa in the oil and gas sector. Negotiations are being led by African Petroleum's non-executive Chairman Frank Timis, who also heads African Minerals Ltd, which has significant mineral exploration interests in Sierra Leone.

In August, African Minerals received a $1.5 billion investment from China's state-owned Shandong Iron and Steel Group for a 25% stake in the Tonkolili iron ore project. That project is just adjacent to African Petroleum's SL-03 block in the country, said Sage.

African Petroleum is the largest license holder in West Africa, with over 10 blocks in Guinea, Ivory Coast, Senegal, Sierra Leone, Gambia and Liberia, he said. It made its first find in block L8-09 offshore Liberia in February this year. It said it made a "significant" oil discovery with exploration well Narina-1 having found a total of 32 meters of good quality net oil pay in the Turonian and the Albian reservoirs.

The company has contracted a deepwater rig to start another drilling campaign in December this year in Gambia and Liberia.

It said Monday that any investment made by PetroChina will be at a value to be agreed, but the deal could potentially put PetroChina's investment at up to A$800 million ($823 million).

"We know what our acreage is worth. It's just a matter of PetroChina coming to the same conclusion as us," Sage said. "The market cap of the company reached over A$3 billion in March this year at A$2/share. The recent activity in the world markets has now made our share price closer to A$1.40 but we're quietly confident that we can get back up to that A$3 billion or A$4 billion range in the next six months after we spud these wells."