BEIJING - PetroChina Company Limited, China's largest oil producer, announced on Monday that its subsidiary has entered into a framework agreement with subsidiaries of INEOS Group Holdings plc for a new trading and refining joint venture in Europe.

The agreement was signed between PetroChina International Company Limited, a wholly-owned subsidiary of PetroChina, and INEOS European Holdings Limited and INEOS Investments International Limited, each a wholly-owned subsidiary of INEOS.

The framework agreement sets out the main principles in which the parties will work towards forming joint ventures related to trading and refining activities at the Grangemouth refinery in Scotland and the Lavera refinery in France.

All companies will work towards the formation of the proposed joint ventures by the end of June 2011, according to PetroChina in a statement released on Monday.

PetroChina's parent company, China National Petroleum Corporation (CNPC) and INEOS, also signed a strategic cooperation agreement on Monday to share refining and petrochemical technologies and expertise between their respective businesses.

If the deals are completed, they will be of great importance for PetroChina's global allocation of resources and market portfolio, exploring the high-end European market, as well as establishing PetroChina's European oil and gas operation center, said PetroChina.

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According to the statement, both sides will improve the long-term sustainability of the INEOS refineries, enhance security of supply for customers and secure jobs and skills in both the UK and France.

After the completion, both sites will remain integrated into INEOS's downstream petrochemical production, said PetroChina officials.

The Grangemouth refinery is located on the Firth of Forth with direct access to crude oil and gas from the North Sea. The Grangemouth refinery processes some 210,000 barrels of crude oil per day and provides fuel to Scotland, Northern England and Northern Ireland.

Further, the Lavera refinery processes 210,000 barrels of crude oil per day. It is located on the coast of the Mediterranean crude oil trading basin, next to the port of Marseille and adjacent to a crude oil terminal. The refinery supplies fuel by pipelines into France, Switzerland and Southern Germany.

Both sites are integrated into INEOS's downstream petrochemical production and remain strategic to its long-term business.

Subsequent to the signing of the framework agreement which defines the principles under which PetroChina International and INEOS will work towards forming the joint ventures related to refining and trading, there will be a period of consultation prior to signing a binding agreement subject to the approval of related regulatory bodies, according to PetroChina.