Financial News

  • 17 June 2014, 8:48

BP And Shell Land China Deals As Premier Visits

Britain's two biggest oil companies will unveil multibillion pound deals with China on Tuesday as the Government attempts to position the UK as Beijing's preferred European investment partner.

Sky News has learnt that BP and Shell are expected to announce agreements on Tuesday as part of a slate of trade deals to be trumpeted by David Cameron, the Prime Minister, during a three-day visit to the UK by Li Keqiang, the Chinese Premier.

Insiders said that BP would announce a long-term deal to supply liquefied natural gas (LNG) to China that is expected to be worth well over 5bn.

Shell is expected to unveil its participation in a strategic framework agreement with the state-owned China National Offshore Oil Corporation (CNOOC), that will involve co-operation on LNG and other projects around the world.

BP's agreement with Beijing is expected to involve supplying China with LNG from projects globally, and will mark one of the company's largest deals to date in the world's second-largest economy.

Beijing recently signalled a move towards a cap on carbon emissions, which would represent a shift from commitments to reduce the carbon intensity of its heavy industry.

In turn, that would make a move towards LNG and other greener energy sources inevitable.

The deals with BP and Shell are expected to account for a significant chunk of roughly 18bn of deals signed between the UK and China during Premier Li's visit.

Others will include the naming of a London branch of China Construction Bank as the first clearing bank for renminbi trades outside China, a key step towards establishing the City as a global hub for transactions using the Chinese currency.

A Chinese fund to invest in UK and European small businesses will also be established, while there are also expected to be further talks about Chinese investment in the Hinkley Point nuclear power project.

The heads of two state-owned nuclear power companies will be part of Premier Li's business delegation, as will the head of the Agricultural Bank of China, sources said.

Speaking to Sky News on Monday, Lord Sassoon rebuffed suggestions that British trade with China had lagged that of European rivals such as France and Germany, saying that it had increased substantially in the last three years while French bilateral trade had declined.

BP, Shell, UK Trade & Investment and Downing Street all declined to comment.

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