UK Prime Minister David Cameron and his Chinese counterpart Li Keqiang during a signing ceremony

BP gas deal and HS2 part of new China-UK package

A gas supply deal for BP worth £11.8bn and a bilateral agreement paving the way for participation of Chinese companies in the construction of  HS2 have been announced as part of a series of contracts fostering cooperation between China and the UK.

The package of deals worth £14bn was unveiled during the visit of China’s Prime Minister Li Keqiang to the UK and signed in Downing Street by Li and his British counterpart David Cameron.

"Today we have signed deals worth more than £14bn, securing jobs and long term economic growth for the British and Chinese people," Prime Minister Cameron said, maintaining that the UK’s cooperation with China will help revitalise UK economy.

According to Cameron, the last 18 months have seen more Chinese investment into the UK than the last 30 years.

"In the last few years we have made a huge difference and built a much stronger bilateral and trading relationship between our countries," he said.

The most significant deal of the package – the £11.8bn gas supply deal for BP will see the company delivering natural gas to China’s state-owned China National Offshore Oil Corporation (CNOOC) for 20 years.

BP’s rival Royal Dutch Shell has extended an agreement with CNOOC to work on energy projects around the world, including LNG.

British engineering company Rolls-Royce has signed a memorandum of understanding with Chinese nuclear reactor manufacturer SNPTC to cooperate on civil nuclear power projects in the UK and other markets.

The UK-based firm currently supplies emergency diesel generators to almost 40 per cent  of all nuclear reactors in China that are in operation or under construction and more than 70 per cent of the safety-critical equipment.

Maidstone-based manufacturer MAP Environmental and Chinese counterpart ZN Shine Solar entered into a joint venture to purchase, develop, construct and manage £400m of UK solar energy equipment, which will create up to 550 jobs in the UK.

A memorandum of understanding (MoU) between the UK’s and Chinese rail industries will open the possibility for Chinese companies to take part on the construction of the £50bn high speed rail link between London and Birmingham, the controversial HS2.

The MoU includes upgrade of existing infrastructure, supply of products and services to third markets, collaboration on research and development, station design, equipment supply, and safety and environment protection.  

"I can see great mutual benefit to be gained from increased co-operation between the UK and China on rail,” said Transport Secretary Patrick McLoughlin, who signed the MoU with Xu Shaoshi, chairman of China’s National Development and Reform Committee. “The railways are a massive success story in both countries and we can boast world class expertise across the sector.”

The agreement states that contracts won in the UK should utilise and build upon the UK supply chain.

The Department for Transport (DfT) said the UK also expects to see greater emphasis on access to the China market for UK companies.

A DfT source said HS2 is planned on the basis it is publicly funded but as the project develops "there will be potential to secure private
sector investment in the new railway infrastructure, rolling stock or wider station developments".

The source added: "The UK believes in an open economy and Chinese companies are as welcome to compete for HS2 contracts as those from
other countries. But we are clear that HS2 - and the tens of thousands of jobs it will create - will provide hugely significant opportunities for British firms and workers."

The HS2 line, initially between London and Birmingham before heading north to Leeds and Manchester, will cost £42.6bn with another £7.5
billion estimated to cover the cost of the trains.

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