TWO of the biggest names in the oil industry have signed a "crucial"

deal to provide equipment for a £2bn groundbreaking crude oil plant on Teesside.

Sonhoe Development Company, which is behind the plant, has now reached agreement with GE Oil and Gas and Chevron Lummus Global (CLG) in a £100m deal which will boost the project's standing on the world stage.

GE Oil and Gas is part of global conglomerate General Electric, the world's second largest company.

Sonhoe technical director Howard Simons said: "This is the crucial deal for us in helping to make the plant a reality."

The interest shown by the two global companies confirms Sonhoe's credentials and paves the way for the largest single investment in the process industry in the Tees Valley for 20 years.

GE will provide Sonhoe with vital equipment including reactors, compressors, pumps and air coolers that will enable the plant to upgrade low quality "heavy"

oil into premium-quality, low sulphur diesel.

The agreement with CLG is for the hydrocracking technology at the heart of the plant needed to convert the heavy crude oil into diesel suitable for the European market.

The upgrader is expected to bring between 2,000 and 2,500 construction jobs to Teesside over four years, and up to 400 jobs on site once the plant is operational, as well as up to 1,500 jobs in the region as a knock-on effect.

Managing director Mike True said: "Sonhoe is a company with ambitious but realistic and doable plans. To have the support of GE and Chevron sends a message across the world that our confidence is not misplaced.

"Two very important pieces of jigsaw are now in place and others are in the pipeline."

Joe Docherty, chief executive of Tees Valley Regeneration, whose inward investment team headed a drive to secure the plant for the region, said: "It is fantastic news that Sonhoe is making such great progress. To sign up GE and CLG is nothing short of a seal of approval from the oil industry."

Wood Mackenzie has also been appointed as independent consultant to investors and lenders for the project.

The Tees Valley was chosen for the upgrader facility because of the availability of brownfield land, deep water access and the highly experienced workforce.

The plant will process 200,000 barrels of crude oil a day - sourced worldwide, including the North Sea, Latin America, the Middle East and Africa.

A gasification complex will also produce more than 500 tonnes of hydrogen and 240,000 therms of synthetic gas a day.

The project will take about seven years to bring to fruition.

It is expected to be operational by 2014 and have a lifespan of between 25 and 30 years.