The deal, announced Monday, the second day of Chinese Vice Premier Li Keqiang's four-day visit to the United Kingdom, calls for refining and trading oil at Scotland's Grangemouth and France's Lavera refineries.
Under a separate agreement, the two companies will share refining and petrochemical technology.
Grangemouth processes around 210,000 barrels of crude oil per day and provides fuel to Scotland, northern England and Northern Ireland; Lavera processes 210,000 barrels of crude oil per day, supplying fuel by pipelines into France, Switzerland and southern Germany.
"The proposal is consistent with our strategy of building a broader business platform in Europe and of becoming a leading international energy company," said Si Bingjun, general manager of PetroChina International London, in a statement.
"These deals are the start of a long-term relationship between INEOS and PetroChina, creating a partnership between one of the world's largest petrochemical companies and one of the world's largest energy companies." said Calum MacLean, chief executive officer of INEOS Refining, in a statement.
"They present a clear opportunity for INEOS to progress its aim of forming strategic partnerships to help grow and strengthen its business."
The agreements will provide further investment in INEOS refineries, securing their competitiveness in European markets, as well as secure jobs and skills in the United Kingdom and France, MacLean said.
The deal will also enable INEOS to diversify its geographic footprint and extend its technology into China, the company said.
While the companies didn't disclose the value of the investment, PetroChina will provide an injection of capital in exchange for a 50 percent share of the refining venture, the Financial Times reports.
The International Energy Agency said in a July report that the surging Beijing economy has redefined the global energy sector as China passed the United States as the world's largest energy consumer. China outpaced U.S. energy consumption by 4 percent in 2009, the agency reported.
Energy consultancy Wood Mackenzie says diesel, gasoline and gasoil demand in China is increasing by about 8 percent annually.
To keep up with that demand, the country's biggest energy companies have gone on a buying spree. Last year China's oil and natural gas acquisitions totaled $24.3 billion, up from $17.1 billion in 2009, data provider Dealogic says.