UK supermajor BP has signed an agreement with PetroChina to build a carbon capture, utilisation and storage (CCUS) cluster in Hainan province in southern China.

The memorandum of understanding signed between BP China and PetroChina’s China Southern Petroleum Exploration and Development will 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.

BP chief executive Bernard Looney at the MoU signing on Thursday said that the Net Zero Teesside Power project is part of a larger project that could cut emissions in half from industrial clusters in the UK.

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

The project’s 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 transportation and storage infrastructure will capture and store up to two million tonnes of CO2 a year.

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 now 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,” said Looney.

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 that also covers shale gas exploration and development and fuel retailing ventures in China 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,” added Looney.

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.