BP Amoco yesterday unveiled plans to step up its presence in China substantially by taking a $1bn stake in the country's largest oil company, PetroChina, and forging a joint venture in gas marketing.
The moves follow BP Amoco's $27bn acquisition of Atlantic Richfield, due to be approved imminently, which will make it the largest foreign oil company in China with assets worth some $1.5bn.
BP Amoco has agreed to take a 20 per cent stake in PetroChina, up to maximum value of $1bn, when the company floats through an international public offering of shares next month.
The two companies have also agreed to build an LNG terminal to supply imported and domestic gas to regions around Shanghai and the Yangtze Delta and develop a chain of at least 150 petrol stations across China.
BP Amoco said the aim was to build a "significant retail presence" in China within five to seven years. It will also consider extending the joint venture into lubricants and aviation fuels. BP Amoco already has joint venture operations at 17 Chinese airports.
Sir John Browne, BP Amoco's chief executive, described China as "an immensely important market" for the group, adding that the alliance with PetroChina was a powerful strategic step towards expanding its presence.
China is the world's second-largest energy market after the US. Gas currently meets just 2 per cent of its needs but this is projected to grow to between 7 and 8 per cent by 2010 under government plans.
PetroChina has estimated reserves of 10.8 billion barrels of oil and 24.3 trillion cubic feet of gas. Next month's IPO is expected to raise a total of $3bn.Reuse content