Oil giant British Petroleum (BP) and Guangzhou Development Industrial Shareholding Corp have signed an agreement to build an oil depot in Guangzhou City, capital of south China's Guangdong Province.

With a storage capacity of 560,000 cubic meters, the Nansha oil depot will be the largest of its kind in the Pearl River delta, a major growth area of China's economy.

Under the agreement, the facility will be built in two phases.

The first phase project will have a storage capacity of 363,000 cubic meters and will cost 1 billion yuan (about US$120 million). It is expected to go into operation in 2004.

The second phase will have a storage capacity of 200,000 cubic meters.

P and the Guangzhou company will control 40 percent and 60 percent of the total shares of the new venture respectively.

Guangzhou also plans to build an oil berth with an annual handling capacity of 8 million tons, as a subsidiary project.

The Pearl River delta consumes 70 percent of the total 18 million tons of oil used by Guangdong Province annually and the figure is expected to continue rising with the rapid development of local economy.

BP sources said that it would make an extra investment of US$3 billion in China in the next five years, and most of the investment would go to Guangdong.

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