June 24, 2010 / 6:27 AM / 7 years ago

BP, Chevron target China deep water block-WSJ

June 24 (Reuters) - Besieged energy giant BP Plc (BP.L) (BP.N) is set to partner with U.S. rival Chevron Corp (CVX.N) to bid for a South China Sea exploration block, the Wall Street Journal said, citing a person familiar with the matter.

The move signals rival firms are still willing to partner with BP in deep water projects in spite of the company’s failure to stop a Gulf of Mexico oil well leak that is threatening to pollute the U.S. Gulf coast, the Journal said.

Chevron will have a 60 percent stake in the block and act as operator, with BP holding the remaining interest, the person told the paper.

Cnooc Ltd (0883.HK), a unit of China National Offshore Oil Corp, has the right to take a 51 percent stake in the block if the companies make a commercial oil or natural gas discovery, according to the paper.

However, it was not known whether Cnooc would exercise pre-emption rights on the asset, the newspaper said.

Oklahoma City-based Devon Energy Corp (DVN.N) has selected BP and Chevron as preferred buyers for block 42/05, located about 250 kilometers south of Hong Kong, according to the Journal.

The companies involved in the deal declined to comment to the Journal. They could not immediately be reached for comment by Reuters outside regular U.S. business hours. (Reporting by Sakthi Prasad in Bangalore; editing by Simon Jessop)

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