BP puts $2.2bn into Rockies field

Lord Browne's ambitions in China may have taken a knock

UK oil firm BP plans to invest up to £1.25bn ($2.2bn) to double production from its share in a gas field in America's Rocky Mountains.

The project, which involves drilling about 2,000 wells, is part of a $15bn programme to develop its US operations.

Earlier, the FT reported that BP was ready to buy a large chunk of Sinopec - China's biggest maker and marketer of refined crude products.

But, according to Reuters, Sinopec rebuffed a bid by BP to take a stake.

BP said the development of the Wamsutter field in the Rocky Mountains, Wyoming, was part of its strategy to develop secure energy supplies from the US.

"This major investment follows more than two years of focused accelerated drilling and technical studies which revealed the untapped potential of the Wamsutter resource," said Tony Hayward, chief executive of BP Exploration and Production.

Chinese doubts

On Thursday, the FT reported that top level talks between BP and Sinopec had been going on for some time and that BP boss Lord Browne "has big ambitions for China".

We doubt that BP would be willing to enter a JV on the scale of TNK-BP at this stage Citigroup

But, even though it is listed on the Hong Kong stock exchange, Sinopec is still mostly state-owned and it is believed that its leaders were not prepared to relinquish a significant share of the nation's oil wealth.

"BP has misread what the Chinese want...They (the Chinese) said 'no'. They've said they're not doing it," a source told Reuters.

It would not have been BP's first foray into setting up a large foreign partnership - the company has invested $14bn (£8bn) in setting up its TNK operations in Russia since 2003.

Meanwhile, on Thursday, BP announced it had signed a letter of intent with India's Hindustan Petroleum Corp to buy a 26% stake in the state-run company's new Bhatinda refinery in the northern state of Punjab.

However, analysts were surprised that BP would seek to make such a bold move in China, where retail fuel prices are capped and from where it can be difficult to bring profits back home.

"We doubt that BP would be willing to enter a joint venture on the scale of TNK-BP at this stage," said Citigroup.

"More likely, BP is looking for incremental project investment opportunities in the Chinese downstream market."