UPDATE 1-Gulf Keystone raises funds as it scales up in Kurdistan

(Adds detail, background)

LONDON, Oct 4 (Reuters) - Britain's Gulf Keystone Petroleum

is to raise $200 million to bolster its resources as it pushes to expand its oil exploration and development in Iraq's Kurdistan.

The company said on Thursday that it was launching $200 million of convertible bonds due Oct 2017, with an annual coupon of between 5.875 and 6.625 percent.

The funds would be used to help it move to large-scale development of a commercial oil find made at its Shaikan block in August, drill deeper there and explore neighbouring blocks, it said.

"In addition to being an important milestone for the company...(this financing) shows an increasing confidence of international markets in doing business in the Kurdistan region of Iraq," said Gulf Keystone chief executive Todd Kozel.

Baghdad and Kurdistan agreed last month to draw a line under a dispute over oil contracts, with the central government saying it would pay foreign companies and Kurdistan resuming halted shipments.

The dispute had flared up after the autonomous region of Kurdistan had angered the central government by signing deals with foreign oil firms that Baghdad said were illegal.

Gulf Keystone is aiming to complete its development plan for the Shaikan field by January, and is looking to pump 150,000 barrels of oil per day from it by 2015.

(Reporting by Rosalba O'Brien; Editing by Neil Maidment)

((rosalba.obrien@thomsonreuters.com)(+44 20 7542 3431)(Reuters Messaging: rosalba.obrien.thomsonreuters.com@reuters.net))