BP PLC and China’s China National Petroleum Corp (CNPC, 中國石油天然氣) next week are to unveil a strategic alliance to develop oil resources in Iraq and other regions, industry sources said on Friday, as the UK and China seek to tighten economic ties.
The pact, one of several high-profile deals to be signed during a visit by Chinese President Xi Jinping (習近平) to the UK, aims to bolster cooperation between the two companies in Iraq, where they are developing the Rumaila oilfield.
Rumaila, in southern Iraq, is the world’s second-largest oilfield and produced 1.34 million barrels of oil per day last year, according to BP’s Web site.
The two companies also seek to expand into new joint ventures in other parts of the world, according to the sources. No clear production or investment targets are expected to be included in the deal, they said.
State-owned CNPC is Asia’s largest oil producer and parent of PetroChina Co Ltd (中石油).
BP is also likely to use the alliance to expand its operations in China, which have been limited mainly to a fuel retail joint venture.
An agreement next week would add to a US$20 billion deal BP signed last year to supply China’s National Offshore Oil Corp (中國海洋石油) with 1.5 million tonnes a year of LNG for two decades. Its peers, Royal Dutch Shell PLC and Total SA, have natural gas operations with CNPC.
For CNPC, the alliance could offer opportunities also to deepen operations in the North Sea and West Africa, where BP has extensive operations.
A BP spokesman declined to comment. CNPC was not immediately available to comment.
The British government wants to use Xi’s visit, which begins tomorrow, to tighten cooperation between the two countries with a number of economic and cultural agreements.
The UK hopes to sign an agreement with Chinese utility companies China General Nuclear Power Group (中國廣東核電集團) and China National Nuclear Corp (中國核工企業集團) to finance the construction of two nuclear reactors at Hinkley Point, Bristol.
However, it was unclear whether the long-mooted deal would be inked during the trip, Chinese Ambassador to the UK Liu Xiaoming (劉曉明) said.
Xi’s state visit marks a significant improvement in ties between the two countries after British Prime Minister David Cameron angered Beijing in 2012 by meeting the Dalai Lama.
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