November 9, 2016 / 8:47 AM / 3 years ago

China company signs MOU with BP on Caribbean oil project

BP's logo is seen on one of its corporate sponsor pavilions in the Olympic park, in Stratfod, east London, July 19, 2012. REUTERS/Andrew Winning/File Photo

BEIJING (Reuters) - Commodity trader Guangdong Zhenrong Energy Co. Ltd has signed a memorandum of understanding with BP Plc (BP.L) for commercial cooperation on an oil refinery in the Caribbean, according to a senior executive and a statement from the Chinese company.

Guangdong Zhenrong, with support from China’s oil majors, plans to upgrade the Isla refinery on the Caribbean island of Curacao and also to build a gas terminal there, at a total estimated cost of $5.5 billion (4 billion pounds).

That would give China, the world’s No.2 oil consumer, a foothold in a strategic hub for energy supply.

Under the MOU signed on Tuesday, BP would supply crude oil to the 335,000 barrel per day refinery, located just 30 miles (48 km) northwest of Venezuela, and also take all refined fuel from the plant, said Chen Bingyan, a senior Guangdong Zhenrong advisor.

BP’s role is subject to parties agreeing on commercial terms, said a second industry official with direct knowledge of the matter.

“BP has an established network in fuel marketing in the Americas,” said Chen, adding that the Chinese firm did not rule out working with Venezuela’s state oil firm PDVSA as a crude oil supplier.

State energy group CNPC, which via its trading arm Chinaoil has been a large lifter of Venezuelan oil, is also expected to supply the plant, said Chen.

The Isla refinery has for decades been operated by PDVSA under a lease agreement, but the cash-poor company has been reluctant to meet Curacao’s requests to modernize the plant, which local residents in the touristy island blame for pollution.

Reporting by Chen Aizhu; Editing by Joseph Radford

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