BP signs $10b gas supply deal

CNPC offers shale gas, retail options to UK giant

BP Plc has also agreed a strategic cooperation with China National Petroleum Corp, the country's largest oil producer, for shale gas exploration and production in the Sichuan Basin and on the supply of retail fuels in China, according to a sepa-rate statement from the UK oil and gas major.

"The success of our Rumaila oilfield project in Iraq has convinced us that there are more opportunities for cooperation between CNPC and BP," said Bob Dud-ley, BP's group chief executive officer.

"It not only strengthens the relationship between the UK and China's largest energy companies, but it further cements the relationship between China and the UK as global business partners."

The announcement signed in London during President Xi Jinping's state visit came amid rumors about global oil giants such as ConocoPhillips Co stopping investment in its Chinese shale-gas exploration projects as a result of falling prices amid a global decline in oil prices.

Experts said though risks to explore shale gas exist, BP has rich experience in shale gas exploration and production overseas.

Han Xiaoping, chief executive officer of online energy information portal China5E.com, said that the huge demand for gas and the high price are both possible reasons for BP's move toward investment in China's shale gas projects.

"Also, CNPC is likely to win other bids for more mature and larger shale gas fields in the future, giving more reasons for the strategic cooperation," he said.

Other analysts said BP's real intention lies in retail fuels and the company is likely to extend its business toward mid-and-down stream of the Chinese oil market.

BP's long-term partner CNPC owns more than 20,000 gas stations, the second-largest number in China, only next to China Petrochemical Corp.