FINANCIAL TIMES: BP and Kuwait seek China investments: “BP is in competition with consortia led by ChevronTexaco and Royal Dutch/ Shell.” (ShellNews.net) 15 March 05

By James Boxell

Published: March 15 2005 02

BP has signed a deal with state-owned Kuwait Petroleum Corporation to look jointly for investment opportunities in China.

The two companies have agreed to work together in areas such as supply, refining, distribution and marketing to China and neighbouring countries.

While BP said it was too early to say what concrete investments the companies could make, the deal could bolster its relations with two key national participants in the global oil industry.

Lord Browne, chief executive of BP, said: "BP is deeply committed to expanding in China and to helping China address energy security issues ... This also marks a significant new direction in the historic relationship between BP and Kuwait. We hope this will bring many opportunities for new ways of investing to build on BP's position in China and elsewhere in Asia."

Stewart Johnston, oil industry consultant at Charles River Associates, said: "The Kuwaitis are supplying increasing amounts of crude oil to China. The fact that they are in bed with them can only improve BP's standing with the Chinese."

BP will also hope that the deal will bring it closer to the Kuwaitis as the government there decides on which bidder to choose for Project Kuwait - a $9bn (£4.68bn) plan to revitalise production at a cluster of its oilfields.

BP is in competition with consortia led by ChevronTexaco and Royal Dutch/ Shell.

ExxonMobil, BP's bigger US rival, has built a Chinese refinery with Sinopec and Saudi Aramco, and is discussing another project.

KPC said this week that it would take a long time to cope with huge demand from China and said it had taken years before the Exxon refinery was approved.

Chinese oil demand has risen by about 1.6m barrels of oil per day in the past two years, with almost 90 per cent of the increase supplied by imports. It expects demand to continue rising over the next decade.