PetroChina seeks approval to build 760km gas link

PUBLISHED : Wednesday, 18 September, 2002, 12:00am
UPDATED : Wednesday, 18 September, 2002, 12:00am

PetroChina - the mainland's No 1 oil company - has submitted a proposal to Beijing to build a 760km natural gas pipeline between Hubei and Sichuan provinces, at an initial estimated cost of five billion yuan (about HK$4.68 billion).

The project, to be undertaken by the company on its own, is part of the oil giant's strategy to mobilise its gas reserves trapped mostly in the country's sparsely populated central and western regions by building pipelines to transport gas to the prosperous eastern and coastal regions.

The revelation that the Hubei-to-Sichuan pipeline has proceeded from the planning stage to the approval-seeking stage came two days after the company announced it had secured a would-be customer for another planned pipeline that will run from Shaanxi province to Beijing and possibly to Shanghai.

The two pipelines are dwarfed in length and investment by the 140 billion yuan, 4,000km west-to-east pipeline now under construction, which will pipe gas from Xinjiang province to Shanghai.

However, they underline Beijing's policy of replacing environmentally damaging coal consumption with cleaner natural gas. They are also future profit growth drivers for PetroChina, whose mature oil fields have seen minimal annual production growth in the past few years.

Company spokesman Cao Zhengyan yesterday confirmed the company had submitted a feasibility study proposal on the Zhongwu pipeline - from Zhongxian city in Sichuan to Wuhan city in Hubei - to the State Planning Development Commission.

'Once we have obtained approval, we expect to be able to complete the pipeline in 18 months from commencement of construction,' he said, adding it would have an initial capacity to pipe about three billion cubic metres of gas a year.

The company will be the investor and operator of the pipeline and has no plans to introduce foreign investors.

Analysts said the company would tap its experience and the expertise of its foreign investors in the west-to-east pipeline project, which is 45 per cent-controlled by various international energy firms, led by Royal Dutch/Shell, ExxonMobil and Russia's Gazprom.

Another gas pipeline on PetroChina's drawing board would link Shaanxi province's Yulin city, Shanxi province to its east, Hebei province, Beijing, Tianjin, Shandong province and, eventually, possibly Shanghai, Mr Cao said.

However, he said it was too early to reveal the project's scale, estimated investment and possible involvement of foreign firms.

PetroChina has signed a letter of intent with would-be gas buyer Shanxi Provincial Natural Gas Shareholding, which plans to buy 1.83 billion cubic metres of gas in the pipeline's first year of operation, rising to 20.68 billion cubic metres in the fifth year.

Shanxi is a major coal-producing province and suffers from pollution worse than many other provinces.

Graphic: pipe18gbz


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