LONDON (Reuters) - BP Plc (BP.L) and China’s CNPC [CNPET.UL] will next week unveil a strategic alliance to develop oil resources in Iraq and other regions, industry sources said on Friday, as Britain 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 to Britain, will aim to bolster cooperation between the two companies in Iraq, where they are developing the giant Rumaila oilfield.
Rumaila, in southern Iraq, is the world’s second-largest oilfield and produced 1.34 million barrels per day in 2014, according to BP’s website.
The two companies will 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 China National Petroleum Corp is Asia’s largest oil producer and parent of PetroChina Co Ltd. (0857.HK)
BP will also seek to use the alliance to expand its operations in China, which have been limited mainly to a fuel retail joint venture. Its peers Royal Dutch Shell (RDSa.L) and Total (TOTF.PA) 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 Oct. 19-23 visit to tighten cooperation between the two countries with a number of economic and cultural agreements.
Britain hopes to sign an agreement with Chinese utility companies CGN and CNNC to finance the construction of two nuclear reactors at Hinkley Point. It was unclear, however, whether the long-mooted deal would be inked during the trip, China’s ambassador Liu Xiaoming told reporters.
Xi’s state visit, during which he will dine at Buckingham Palace, marks a significant improvement in ties between the two countries after Prime Minister David Cameron angered Beijing in 2012 by meeting the Dalai Lama.
Additional reporting by Aizhu Chen in Beijing, editing by William Hardy