BP is set to build a carbon capture, utilisation and storage (CCUS) cluster with PetroChina in Hainan province in southern China.

The UK supermajor’s China arm signed a memorandum of understanding with PetroChina’s China Southern Petroleum Exploration and Development to focus on CCUS-based low-carbon projects onshore Hainan.

Under the agreement, the two companies will capitalise on BP’s expertise in developing the UK’s first gas power project with CCUS technology.

At the signing on Thursday, BP chief executive Bernard Looney said the Net Zero Teesside Power project is part of a larger project to halve emissions from industrial clusters in the UK.

The Net Zero Teesside Power project is a pioneering gas-fired power project — fully integrated ‎with carbon capture technology, with emissions planned to be exported and securely ‎stored.

Its proposed combined cycle gas turbine project will have output of up to 860 megawatts of low-carbon electricity. From the power plant alone, the proposed carbon transport and storage infrastructure will capture and store up to 2 million tonnes per annum of carbon dioxide.

Looney said that CCUS will play a critical role in energy transition especially in industries like power, steel and cement; and CCS technology has the potential to capture more than 90% of CO2 emissions from hydrocarbon energy.

The world increasingly needs lower carbon energy, but also needs energy that is secure and affordable, he said.

“That is a complex challenge. We need different fuels including oil and gas. Now we see real momentum behind CCUS,” Looney said.

He said the MoU is part of the strategic partnership BP has with PetroChina’s parent, China National Petroleum Corporation, that was signed in 2015 and recently extended to 2026.

The initial goal of the partnership is to expand the co-operation on international projects. The partnership also covers shale gas exploration and development and fuel retailing ventures in China and is now expanded to low-carbon projects.

“By signing the MoU on the Hainan CCUS regional centre project, we are honoured and excited to be starting another chapter in our partnership,” Looney added.

China Southern Petroleum is PetroChina’s onshore outfit focusing on E&D in Hainan. The company now produces 6000 barrels per day of oil from the Fushan oilfield in the province.

Upstream understands that China Southern Petroleum has worked out plans to build CCUS projects in Hainan with capacity of 1 million tonnes per annum of CO2, expandable to 10 million tpa in future.

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