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Britain-based BP, Europe's largest oil company, is in regular contact with Chinese oil firms and a deal could be afoot.
"We have kept close contact with the country's major oil companies such as Sinopec and China National Offshore Oil Corp (CNOOC) for further cooperation, and senior officials from both sides have exchanged visits regularly," said a BP spokesman yesterday in Beijing.
An industry source close to BP's China activities yesterday said BP is planning "something big" for China, but everything is at the preliminary stage.
The source said BP Chief Executive John Browne would visit Beijing at the end of this month for an annual meeting held in Tsinghua University, and would meet high-level Chinese officials.
A report in the Financial Times yesterday said BP has held talks with Chinese officials about a possible partnership with Sinopec, Asia's top oil refiner, which could be as ambitious as BP's US$14 billion partnership with Russia's TNK in 2003.
Negotiations would focus on what stake in Sinopec BP would receive in return for injecting assets - presumably oil or gas fields - and expertise into a joint venture, the newspaper said, citing sources close to the talks.
A deal with Sinopec would give BP unparalleled access to the world's second largest oil consumer and the most important growing market in the world. Meanwhile the Beijing-based State-owned refiner would benefit from BP's upstream exploration activities, the paper said.
Chen Ge, Sinopec spokesman, yesterday told China Daily he was not aware of talks with BP, and described market speculation as "rumors."
Since its initial thrust in the 1970s, BP has a total investment in China of more than US$3 billion in commercial projects.
The company aims to accelerate growth here to cash in on surging energy demands as the nation's economy continues to speed along.
Analysts have expressed doubt about a large-scale partnership between BP and Sinopec which might involve stake sales.
They say that as BP is looking for incremental investment opportunities in the Chinese downstream oil market such as in refining and petrochemicals, deals as big as the TNK-BP partnership could be seen as increasing BP's risk profile too much.
BP already has retail joint ventures with Sinopec and PetroChina in South China, and a petrochemicals joint venture with Sinopec and Shanghai Petroleum.
Sinopec shares yesterday rose 0.746 percent in Hong Kong.
(China Daily October 14, 2005)
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