BP Amoco, PetroChina Ally
LONDON (AP) _ BP Amoco said Thursday that it will form a joint venture with PetroChina Co. to market natural gas in eastern China. BP Amoco also revealed that it has agreed to take 20 percent of the shares in PetroChina’s initial public offering of stock, up to a maximum of $1 billion.
PetroChina is a unit of state-owned China National Petroleum Corp., China’s largest oil and gas company.
BP Amoco, based in London, said in a statement that the two companies intend to cooperate in building the support system to supply imported and domestically produced gas to the Shanghai area and the Yangtze River Delta. The joint venture may build a liquified natural gas terminal, it added.
BP Amoco said that the gas project is part of ``a strategic alliance″ that it has agreed to in principle with PetroChina.
PetroChina is scheduled to sell stock soon on the U.S. market. American labor leaders and human rights activists, opposed to China’s policies toward its people, have urged investors not to buy.
The new BP Amoco-PetroChina alliance also includes a preliminary agreement to build a fuels marketing business in China’s coastal provinces.
The companies will build or acquire up to 150 service stations in the first year of operation and want a significant retail presence within five to seven years, the BP Amoco statement said. They may expand into aviation fuels, it added.
Additionally, the alliance will allow BP Amoco to get involved in the West-East China gas pipeline.
BP Amoco’s executive president for China, Gary Dirks, said the agreement gives access to China’s gas markets, which promise massive growth in demand over the next decade as the country moves from coal to cleaner fuels.
Gas currently meets just 2 percent of China’s energy needs, but the government wants to increase that to 7 percent to 8 percent by 2010.
Dirks added that the agreement fits well with the significant gas position the company will have in Asia after its planned acquisition of Atlantic Richfield Co.