Oil prices continue to fluctuate,…
Light fundamental changes, but active…
Not only is China investing generously in Britain’s nuclear power industry, but BP, the giant British energy company, plans to expand on its investment in China’s energy, with a focus on gas.
On Oct. 21, Chinese President Xi Jinping and British Prime Minister David Cameron reached agreement on a deal in which China’s government-owned General Nuclear Corp. (CGN) would invest heavily in the kingdom’s nuclear industry and even be a contractor for building such power plants.
That wasn’t all the deal-making between the two countries that day, however. Another state-owned energy concern, the China National Petroleum Co. (CNPC), signed two large deals with BP. The first focuses on cooperation to exploit China’s shale gas resources in the Sichuan Basin in the east-central part of the country.
Related: Future Of Iraq’s Oil Industry Under Threat
China has been struggling to shift its sources of industrial energy from coal to cleaner-burning gas. Already the country is the world’s largest consumer of coal, but it’s had trouble making the switch because much of its shale gas reserves are buried more than 10,000 feet below ground.
This makes recovering shale gas in China more complicated and twice as expensive as in the United States. For example, drilling and completing some Chinese shale gas wells can cost as much as $15 million each.
BP’s second deal with China focuses on developing retailing opportunities inside China and exploring trading options elsewhere in the world.
Related: Shell Sets Its Sights On “Unexplored” Oil Basin In Nova Scotia
A third major deal BP signed wasn’t with CNPC but with the state-owned China Huadian Corp., which operates the country’s largest gas-powered generator. BP agreed to sell Huadian as much as 1 million tons of liquid natural gas (LNG) for the next two decades in a transaction worth as much as $10 billion.
“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,” BP CEO Bob Dudley’s statement said.
The value of the deals between BP and CNPC wasn’t specified, but are widely expected to add billions of dollars in trade between the UK and China. Edward Yang, BP's China president, said his company expects China to be the world’s largest energy importer by 2035, anticipating that consumption will grow by 60 percent by then with its energy production enlarging by 47 percent in the same period.
Related: U.S. Shale Drillers Running Out Of Options, Fast
BP and CNPC also agreed to work together on carbon emissions trading and sharing technology and management practices. All the agreements were signed in the presence of Xi and Cameron at the British leader’s residence at 10 Downing St.
These deals extend BP’s investment in China. In 2014, the company signed a contract that will supply LNG to another state-owned company, the China National Offshore Oil Corp. (CNOCC) for nearly $20 billion.
“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,” Yang said.
“Through this agreement and others, BP is committed to being one of China’s preferred energy partners now and in the future."
By Andy Tully of Oilprice.com
More Top Reads From Oilprice.com:
Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com