Shell Expected to Win Bidding of China's Largest Gas Piping Project

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Last updated at: (Beijing Time) Tuesday, January 08, 2002

Shell Expected to Win Bidding of China's Largest Gas Piping Project

Although China's west-east gas transmission project with its bidding result has not yet been released, the foreign company expected to win would surface soon. This is the first time the Chinese government ever allows controlling share by foreign investors in pipe construction and management.

Gas giants in fierce competition

Although China's west-east gas transmission project with its bidding result has not yet been released, the foreign company expected to win would surface soon.

Petro China had planed to hold a press conference on December 30, 2001 to make known the bidding result but, for one reason or another, it has been delayed, sources close to the company said. Now negotiations are drawing to an end, with Holland-based Shell Group expected to be the biggest winner and US-based Exxon Mobil hopeful to grasp its share.

Signs show that by now only a question of procedure and time remains for the competition among transnational gas giants. Shell told media cautiously that it is still bending on final-stage preparations, yet admitted it is among those companies favored by China side. Meanwhile Exxon Mobil also says they are doing final competition work.

As reported, the bidding winner would set up joint venture with Petro China for pipe network construction and management in future. The bid-inviting work was all carried out by the overseas listed PetroChina Company Limited, while another Chinese gas giant Sinopec Corp participated through share purchasing and acted as supervisor.

First foreign investment in gas project

This is the first time the Chinese government ever allows controlling share by foreign investors in the west-east gas pipe project for in the past pipe construction and management must be controlled by Chinese side.

There are two special policies for the project, an official concerned says. One is to open the project entirely to foreign companies and allow them to control the pipe engineering. The other is, taking into consideration specialty of the project, the State Council has decided to invite foreign cooperation for construction of urban natural gas network.

This is no doubt a happy tiding for luring foreign funds. Petro China announced its bid inviting on December 22, 2000, and this has received warm response from altogether 90 gas or pipe companies, large enterprises and banks. But only seven foreign companies got qualified finally, according to the State Development Planning Commission.

Foreign investment in west-east gas piping project

Foreign Investors Allowed to Control West-East Gas Pipeline Projects

Foreign businessmen are welcome to invest in the west-east gas transmission projects, and are permitted to have a controlling share in such projects, said an official with the State Council.

Foreign Fund Allowed to Hold Shares in West-East Gas Transmission Project

On December 4, 2000, Spokesman for the Office of the State Leading Group in Charge of the West-East Gas Transmission Project Construction announced in Shanghai two special policies on the Project: Opening the whole line of the project to the outside for all-round cooperation, the foreign side can hold share of the project; considering the particularity of the project, the State Council has made an exceptional decision to include the construction of the urban natural gas pipeline network into the cooperative scope of opening to the outside world.

By PD Online Staff Li Heng

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