For one-point-six billion dollars in cash Petrochina will take BHP's minority shares in the East and West Browse joint venture off the Western Australian coast.
BHP is getting out of a troubled development while Petrochina hopes to secure substantial gas supplies.
The deal is expected to be finalised next year, subject to approval.
Correspondent: Karon Snowdon
Speaker: Peter Strachan, independent corporate analyst and author of 'Stock Analysis'
SNOWDON: The major partner in the proposed Browse development, Woodside Petroleum is expected to make a decision next year on whether to go ahead with its plans to exploit the estimated 15 trillion cubic feet of natural gas.
BHP follows Chevron to exit the joint venture, Royal Dutch Shell and BP remain.
In a statement, BHP says its getting out of a non-strategic asset, while PetroChina is getting a world class gas resource. The project has had its fair share of problems. They include rising costs, and controversy over the site of the proposed gas processing hub on the coast by the State government which is facing stiff local opposition and was not favoured by some partners.
Peter Strachan, an independent corporate analyst and author of 'Stock Analysis' says PetroChina is taking a long term view.
STRACHAN: PetroChina is looking to secure supplies of energy for the very long term and the Chinese government through its national oil companies, is very active all over the world, looking for energy and raw materials - in Asia, in Africa, in Australasia and South America.
SNOWDON: Petrochina is the world's biggest oil producer by market value.
STRACHAN: It's good for the project to have PetroChina there, because Petro China is clearly an entity with deep pockets, and they go right down in the pocket of every Chinese person living in China, because it's the government and they're also an end-user of the LNG, so that's what they want. They want to be able to get their hands on the product that the Chinese economy is going to need. It's not so much that the profits that they think they can make.
SNOWDON: As an investor and a buyer, the PetroChina investment will be watched for any pricing impact.
STRACHAN: The potential for transfer of pricing is large, when you have overseas joint-venture partners who're more interested in the money they can make, by selling the product than by actually making the product in the first place.
SNOWDON: In comments earlier this year PetroChina's Chairman said he planned to spend 60 billion dollars this decade to secure oil and gas supplies.
It means there's a lot of competition, including from the United States and Africa, entering the market in that time. And the PetroChina deep pockets will be needed, to pay its share of the multi-billion production costs on top of its initial payment to BHP.
STRACHAN: But there's also plenty of growth in the market and the demand is growing dramatically. China's gone from a standing start in 2005, to currently consuming about 17 or 18-million tonnes per annum, and I would expect that to be 50-million tonnes per annum by 2025. So you know, they're continuing to expand their demand by about the size of one LNG train every year, another four million tonnes a year.
SNOWDON: PetroChina also part owns the Australian company Arrow Energy, which is planning an LNG project in Queensland. The Browse project is expected to produce 50 million tonnes of LNG a year when shipping begins in 2018.