The China Development Bank (CDB), a major policy-oriented bank, will provide 10 billion yuan (about 1.2 billion U.S. dollars) in loans this year to the China Petroleum Co. Ltd to develop oil and gas.

According to an agreement signed Beijing Tuesday, the loans will help the petroleum company increase oil production by 6.62 million tons and gas by 2.2 billion cubic meters in the first year.

The China Petroleum Co. Ltd was established by the China National Petroleum Corporation, the nation's key oil development arm, last year.

The CDB increased its loans to the China National Petroleum Corporation from 2.5 billion yuan in 1994 to 37 billion yuan in 1999.