BP has started the construction of its $20 million facility at Largs North in Adelaide. It is the first phase of the oil and gas giant's $41 million investment over the next five years.

With the 30 million litre tank, South Australia's security of diesel supply will be boosted, SA Energy Minister Tom Koutsantonis said on Monday. He said the state's growing mining sector is expected to need more energy with the opening of new mines and new shipment of iron ore.

The minister said the BP expansion would provide the reliability of supply when the new facility comes online in November 2013. He said the project is an indicator of BP's confidence in SA's mining industry.

Besides the new facility, BP is also developing an offshore exploration in the state to identify new oil and gas reserves.

While expanding in SA, the British energy firm and its joint venture with Russian oil operators sold for $61 billon its TNK-BP project to Rosneft, the state-owned oil giant in Russia. BP actually sold half of its stake in TNK-BP to Rosneft for $17.1 billion cash and a 12.84 per cent stake in the Russian oil group AAR. Rosneft will also purchase the other half of the joint venture from AAR for $28 billion.

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