(EnergyAsia, October 23 2015, Friday) — UK major BP said it has signed an oil and gas framework agreement with China National Petroleum Corporation (CNPC) and a 20-year deal to supply liquefied natural gas (LNG) to China Huadian Corp worth US$10-billion.
BP said it expanded an ongoing global partnership with CNPC by agreeing to jointly work on potential shale gas exploration and production in China’s Sichuan Basin, fuel retailing ventures in China and other countries, and LNG and emissions trading.
Earlier, BP said it had agreed to supply China Huadian Corp up to one million tonnes of LNG per year over the next 20 years.
The two agreements were part of £40 billion worth of deals signed during the current four-day visit to the UK by Chinese President Xi Jinping.
“The success of our Rumaila oil field project in Iraq has convinced us that there are more opportunities for cooperation between CNPC and BP,” said Bob Dudley, BP’s group chief executive.
“This strategic partnership not only strengthens the relationship between the UK and China’s largest energy companies, it further cements the relationship between China and the UK as global business partners.”
The agreement, signed in the presence of President Xi and UK Prime Minister David Cameron, is expected to add several billion dollars in future trade to BP’s already significant business with China.
“CNPC and BP have enjoyed a longstanding, cooperative relationship involving projects both in and outside of China,” said Wang Yilin, CNPC chairman.
“This framework agreement on strategic cooperation will further facilitate our two companies’ joint efforts in exploring opportunities on a global scale, be conducive to enhancing cooperation, and take our strategic partnership to a new height.”
The two companies were the only winners in Iraq’s first post-war licensing round in June 2009. Rumaila, one of the world’s largest oilfields, now produces 1.3 million b/d.
“We expect China’s energy production to rise 47% and its consumption to grow 60% by 2035, making it the world’s largest energy importer. Through this agreement and others, BP is committed to being one of China’s preferred energy partners now and in the future,” said Edward Yang, BP China’s President.
Commenting on the LNG agreement with China Huadian Corp, Mr Dudley said it will play an important role in enhancing China’s energy diversification and supporting its economic growth.
“Not only does it strengthen China’s connections to BP and the UK as global trading partners, it also supports China’s commitment to improving its air quality and reducing its emissions through the use of lower carbon fuels,” he said.
Huadian is one of the five largest state-owned power generation companies in China and the country’s largest gas-fired power generator.
“This agreement is not only in line with the common objectives of our companies, but it also matches the energy policies of China and the UK,” said Li Qingkui, Huadian’s chairman.
“Lower carbon power generation is part of Huadian’s mission to bring greater value to the economy and society while growing ‘Green Huadian’ into a world-class energy group. We look forward to further cooperation with BP in the near future and actively contributing to energy security and a cleaner energy future.”
BP said it has been operating in China since the early 1970s. With an accumulated investment of current operations around US$ 4.5 billion by the end of March 2015, BP is a top foreign investor in the Chinese oil and gas sector.
The major’s business activities in China include petrochemicals manufacturing and marketing, aviation fuel supply, oil product and lubricant retailing, LNG terminal and pipelines and chemical technology licensing.