The Rumaila field, contracted to BP and China National Petroleum Corporation, includes an area ten miles long studded with mines.

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Another chunk went to big foreign oil companies: Britain's BP, CNPC of China and Petronas of Malaysia have all bought stakes.

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Other foreign firms that have signed agreements to look for shale gas in China include BP, Chevron and French company Total.

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Each time stocks try to sustain a bounce another negative headline from Europe, China, BP or Goldman Sachs weighs down the market.

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Meanwhile brighter prospects loom eastwards as BP lays the groundwork for a second world-scale plant at their BP Zhuhai site in Guangdong Province, China.

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In exchange, the Chinese oil firm signed a letter of intent with BP Amoco calling for the establishment of a gas-marketing joint venture in eastern China.

CENTERFORSECURITYPOLICY: Center For Security Policy