On Wednesday, in an expansion of their ongoing global partnership, BP and China National Petroleum Corporation (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 and other international partnerships.
“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 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 was signed during President of The People’s Republic of China, Mr Xi Jinping’s visit to the UK in the presence of President Xi and UK Prime Minister David Cameron. It 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.”
In addition to these agreements to explore opportunities within China, BP and CNPC have agreed to explore oil and LNG trading opportunities globally, work together on carbon emissions trading, and share knowledge around technology and management practices.
“BP has been committed to doing business in China for more than 40 years and we’re pleased to expand a partnership that supports continued growth of the Chinese energy sector,” said Edward Yang, BP China President. “We expect China’s energy production to rise 47 percent and its consumption to grow 60 percent 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.”
The companies have also agreed to cooperate on future fuel retailing ventures in China. In addition to these Chinese agreements, BP and CNPC have agreed to explore new trading opportunities globally and also to share knowledge around technology and management practices. Both companies are partners in the operation of the Rumaila oil field project in Iraq and see this as a model for future global cooperation.
BP signs an LNG agreement
In the second deal of the day, BP and China Huadian Corporation (Huadian) signed a sale and purchase agreement for BP to sell Huadian up to 1 million tonnes of liquefied natural gas (LNG) per year worth up to $10 billion over the next 20 years.
“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 Bob 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.”
The agreement with Huadian was one of a number of new agreements with Chinese firms, adding several billion dollars in future trade to the BP’s already significant business with China and underscoring the important and growing trade links between the UK and China.
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, Chairman of Huadian. “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.”
“We expect China’s energy production to rise 47 percent and its consumption to grow 60 percent by 2035, making it the world’s largest energy importer,” said Edward Yang President of BP China. “This agreement with Huadian further demonstrates BP’s long term commitment to helping China diversify its energy supply and improve air quality. We are pleased to serve as China’s trusted energy partner, now and in the future.”
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