BP PLC and two Chinese companies signed agreements on Oct. 21 respectively relating to natural gas exploration and supply as part of Chinese President Xi Jinping’s visit to the UK.
BP and China National Petroleum Corp. (CNPC) entered into a framework agreement on strategic cooperation covering potential shale gas exploration and production in the Sichuan basin, and future fuel retailing ventures in China along with other international partnerships.
The deal is expected to add several billion dollars in future trade to BP’s business with China, the company says.
“The success of our Rumaila oil field project in Iraq has convinced us that there are more opportunities for cooperation between CNPC and BP,” explained Bob Dudley, BP Group chief executive.
Rumaila is one of the world’s largest oil fields, currently producing 1.3 million bo/d. In June 2009, BP and CNPC were the sole winners in Iraq’s first post-war licensing round.
The companies are one half of the Rumaila Operating Organization, which plans to increase production by 50% from Rumaila to 2.1 million b/d by the end of the decade (OGJ Online, Dec. 17, 2014).
“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,” said Edward Yang, BP China president.
CNPC Chairman Wang Yilin said, “CNPC and BP have enjoyed a longstanding, cooperative relationship involving projects both in and outside of China. 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.”
LNG supply deal
Separately, BP and China Huadian Corp. signed an agreement for BP to sell Huadian as much as 1 million tonnes/year of LNG worth about $10 billion over the next 20 years.
Huadian is one of the five largest state-owned electric power generation companies in China and the country’s largest gas-fired power generator, BP says.
“This marks another long-term LNG supply deal between BP and Chinese buyers and it will play an important role in enhancing China’s energy diversification and supporting its economic growth,” said Dudley. “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.
“This agreement also strengthens the connectivity of global gas markets, which is important for countries seeking more diverse and secure energy supplies,” he said.
Huadian Chairman Li Qingkui said, “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.”
BP has been operating in China since the early 1970s, and has an accumulated investment of current operations about $4.5 billion.
BP’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.