BG secures Chinese funds to finance expansion plan

BG signed a $1.5bn (£940m) agreement with the Bank of China yesterday to fund an expansion of the oil and gas giant's activities in the country.

The memorandum of understanding comes on top of an existing $200m loan facility between the bank and BG, which is already exploring for gas off China's Pacific coast.

"This is a significant agreement for BG Group," the company's chief executive Sir Frank Chapman said. "It affirms our existing excellent relationship with the Bank of China.

"BG Group has a well established presence in China, as a result of our LNG [liquefied natural gas] sales into this valuable and rapidly growing market, through a long-term sales and equity agreement with CNOOC and our QCLNG project in Australia, and with an extensive exploration programme offshore China that has already produced a discovery."

The MoU was one of £1.4bn worth of trade deals signed during yesterday's visit to the UK by the Chinese Premier Wen Jiabao. Although the BG agreement was the biggest, the visit also saw Chinese regulators approve Diageo's plans to take a controlling stake in Sichuan Chengdu Quanxing, the maker of the top Shui Jing Fang brand of Chinese "baijiu" vodka.

The Guinness to Smirnoff drinks giant will buy an additional 4 per cent stake in Sichuan Chengdu Quanxing for about £13m, taking its total holding in the joint venture to 53 per cent. The deal will trigger a mandatory offer by Diageo for the Chinese group, worth about £700m.

China also said it was lifting a ban on UK poultry exports. The summit follows Mr Cameron's visit to China in November last year, when Rolls-Royce struck a $1.2bn jet engine deal.

The latest trade initiatives came as the leaders steer the countries towards their target of expanding bilateral trade to $100bn by 2015, compared to about $38bn last year.