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PetroChina Concludes Gas Deals
China's multibillion dollar west-east gas transmission project has received strong support from areas it will pass through.
Operator PetroChina signed letters of intent for gas sales Wednesday with 33 companies from five provinces and municipalities the pipeline will be laid in.
It is hoped that the move will lead to massive economic benefits for the millions of people living in the region.
The US$14.5 billion project aims to pipe 12 billion cubic metres of natural gas annually from Xinjiang's Tarim Basin to the energy-starved Shanghai and Yangtze River Delta by 2005.
It is deemed to be the centre-piece for China to develop its economically backward but resource-rich western regions and to better protect the environment in eastern regions.
Gas consumption preliminarily confirmed by the 33 companies is expected to reach 9 billion cubic metres per year by 2005, the break-even point for the project to cover its costs, PetroChina said.
By 2007, consumption is expected to rise to 13 billion cubic metres per year.
Ma Fucai, chairman of the company, said Wednesday's signings laid a solid foundation for the project to be transmitting gas by 2003.
The construction of the 4,000-odd kilometre pipeline is expected to begin in the second half of this year, Ma added.
Zhang Guobao, vice-minister of the State Development Planning Commission, said the signings will further spark the interest of foreign investors in the project.
PetroChina said last month that 19 foreign energy companies had submitted bids to help China build the pipeline, including BP Amoco, Royal Dutch/Shell, Exxon Mobil and TotalFinaElf.
However, Jorg Wuttke, chief representative of BASF China Limited, one of the 33 companies, said the firm's signing was not a final agreement for gas sales.
"It only expressed our intentions about the quantity of gas. We still need to negotiate with PetroChina for the price of the gas," he said.
"We are willing to use the gas if the price for us is the same as for any other competitors elsewhere in China," he added.
Zhang said the gas project requires "co-ordination between upper, middle and downstream sectors," that is gas exploration and production companies, as well as transmission and consumption firms. He said PetroChina should co-operate with other energy corporations as well as provinces along the planned pipeline to open up potential natural gas markets in China.
PetroChina has pledged to continue its marketing efforts in the Shanghai Municipality and Jiangsu, Zhejiang, Henan and Anhui provinces to enhance awareness of the project with the ultimate goal being increased natural gas usage in these areas.
Experts said the potential demand in Shanghai and the Yangtze River Delta is expected to reach 4.3 billion cubic metres in 2003, 7.4 billion in 2004, 10 billion in 2005 and 20 billion in 2010.
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