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Thu, Jul 15, 2010 - Page 10 News List

PetroChina and BP continue methane project in Xinjiang


PetroChina (中石油) and BP have agreed to continue exploring for coal-bed methane in Xinjiang, the Chinese firm said yesterday, days after saying it would welcome closer ties with the troubled British group.

The comments were published after PetroChina told the Financial Times on Monday that it would “welcome cooperation opportunities” with BP, which is battling to contain a massive oil leak in the Gulf of Mexico.

PetroChina, the listed arm of the country’s top oil producer China National Petroleum Corp, and BP have completed a preliminary assessment of the Sha Erhu block in the Tuha basin in the remote northwestern region of China, the company said.

The two companies have reached a “new cooperation” agreement on the project, including the budget, drilling contracts and staff needed for the next stage, PetroChina said in an internal newsletter.

PetroChina is open to working with BP on coal-bed methane, oil and natural gas exploration, Mao Zefeng, a Hong Kong-based spokesman for PetroChina, said yesterday.

Mao declined to comment on whether the Chinese oil giant was interested in acquiring BP’s overseas assets, only saying existing deals with BP were “going smoothly.”

The two firms currently have a joint venture to operate petrol stations in the southern province of Guangdong.

Chinese energy companies have this year invested billions of US dollars on overseas acquisitions, including a deal by China’s top refiner Sinopec (中石化) in April to acquire a stake in a Canadian oil sands project for US$4.65 billion.

Meanwhile, China’s Shandong Iron and Steel Group (山東鋼鐵集團) has agreed to pay US$1.5 billion for a stake in London-listed African Minerals’ Sierra Leonean mine project, African Minerals said. The investment, which would give Shandong Iron and Steel a 25 percent stake in the Tonkolili iron ore mine, is the latest in a series of investments by resource-hungry China in West Africa’s rich mineral deposits.

Shandong’s funding would help build the Tonkolili mine and pay for related rail and port infrastructure, said a statement posted on Tuesday on African Minerals’ Web site.

“When completed, this strategic investment will enable us to accelerate the development of Tonkolili,” it said.

Shandong would also gain stakes in two other African Minerals subsidiaries and secure long-term supplies of 10 million tonnes of iron ore annually at prices discounted from the market.

Shandong Iron and Steel is China’s fifth-largest steel mill by output, according to the country’s state-run press.

China’s hunger for raw materials has soared in recent years along with the development of its economy and its firms have increasingly looked at West African countries for minerals.

Last month, African Minerals sold a 12.5 percent stake in the company to China Railway Material, a supplier of steel products to China’s rail industry, for US$280 million.

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