BP signed a $20 billion agreement with China National Offshore Oil Corporation (CNOOC) this week as part of a series of trade deals struck during Chinese Premier Li Keqiang’s visit to the United Kingdom. The deal, which will supply liquefied natural gas to areas of Southeast China, will last 20 years and begin in 2019.
The BP deal accounts for the majority of more than $24 billion worth of trade and investment deals signed at the annual UK-China summit, which began Tuesday in London. Trade between the two countries has quickly increased as the United Kingdom tries to position itself as China’s top trade partner in Europe. “I’ve always said that a key part of that plan is linking this country up to the fastest growing economies on the planet and China is central to that,” said British Prime Minister David Cameron at a press conference Tuesday. While still lagging behind France and Germany in trade volume, Britain has received more Chinese investment in the last 18 months than in the previous 30 years combined.
China said the BP deal is part of its widespread effort to reduce carbon emissions by switching more of its energy supply to natural gas. The Chinese government has set lofty goals for domestic production, which has been unable to keep up with rapidly rising demand. To help meet its energy needs, China inked a $400 billion deal with Russian natural gas giant Gazprom in May.
In addition to the BP deal, CNOOC also signed a Global Strategic Alliance Agreement with Royal Dutch Shell Corporation, recommitting to cooperate in upstream, midstream, and downstream business opportunities. Other Chinese companies, such as China Minsheng Investment Corporation and MAP Environmental Ltd, signed deals to finance and research clean energy in the UK and in China. Altogether, more than ten deals were signed at the UK-China summit, including:
- A Memorandum of Understanding between China Development Bank and Lloyds Banking Group to secure Chinese investment for UK infrastructure and energy projects
- A collaboration agreement between Shenzhen Xingcheng Holdings, BRE and Nottingham University to develop China-based accreditation and executive education programs
- A collaboration agreement between China Merchant’s Group and the Victoria and Albert Museum to develop China’s first major museum of design
Other agreements involve biotechnology and drug development research and Chinese financing for small and medium sized enterprises in the United Kingdom and Europe.