Reply #24: China paves way for £14bn BP oil stake [View All]

[EuroObserver]

http://observer.guardian.co.uk/business/story/0,,1717857,00.html

Breakthrough deal with Sinopec would make UK energy major Beijing's biggest overseas partner

Nick Mathiason
Sunday February 26, 2006
The Observer

BP has been given the green light to make the largest investment by an overseas company in China.

The Observer has learnt that in recent days Beijing has agreed to allow BP to enter into a joint venture with Sinopec, the foreign-listed arm of China Petroleum Chemical Corporation, which is China's biggest oil producer and refiner. This could see BP take a $14bn stake - equivalent to 25 per cent of Sinopec's shares.

The signal from senior Chinese government figures that it has sanctioned an investment into one of its most important energy firms represents a spectacular breakthrough for the UK energy giant, though it appears to rule out a total takeover of the Chinese firm by BP.

But a deal will put BP at a strategic advantage, making it the most significant overseas player in what will shortly be the most voracious energy-consuming country in the world. If successful with a tie-up, BP will rival Exxon as the world's biggest energy firm. For Sinopec, a deal with BP will help with its exploration activities - an area where it currently lags behind its two national rivals.

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