China National Petroleum Corp. has finalized the routing of a proposed natural gas pipeline linking the Tarim basin in northwestern China's Xinjiang autonomous region to Shanghai in the east.
The 4,212-km pipeline will pass through 15 major cities before terminating in Shanghai. The 15 cities are Korla, Turpan, Shanshan, and Hami in Xinjiang; Liuyuan, Zhangye, Wuwei, Lanzhou, Dingxi, and Liquan in Gansu; Luoyang and Xinyang in Henan; Hefei in Anhui; and Nanjing and Changzhou in Jiangsu.
The construction, which is scheduled to start next year, with completion slated for 2007, will cost 60 billion yuan. The pipeline will have a design capacity of 20 billion cu m/year.
Foreign companies can invest in up to 50% of the pipeline. But China ruled out the possibility of foreign companies being allowed to operate the pipeline, indicating that CNPC will be the operator.
To date, BP Amoco PLC and Enron Development Corp., a unit of Enron Corp., have showed interest in participating in the pipeline construction.
Last year, Enron Development and CNPC undertook a separate plan to build a 503-km pipeline to move 3 billion cu m/year of gas from Sichuan to Hubei province. Enron took a 45% share of the 1.9 billion yuan project, which is expected to be completed this year.
The largest foreign participant in China's onshore gas sector is Royal/Dutch Shell. Last September, Shell signed a $3 billion contract with CNPC to jointly explore and develop gas resources in northwest China's Ordos basin. The contract allows Shell to tap gas reserves on the Changbei block, which covers 1,600 sq km, build a gas pipeline, and establish a sales network.
Gas for the pipeline will come from the Tarim basin, where Chinese oil firms have identified 510 billion cu m of proven natural gas reserves (OGJ, Jan. 10, 2000, p. 14).
Tarim produced 436 million cu m of natural gas in 1999, up 67% on the year, as compared with the national total of 25.20 billion cu m. CNPC plans to increase its natural gas output to 18 billion cu m this year, up 10.7% from 1999.
China has decided to capitalize on its natural gas resources in order to ease pollution and to promote for sustainable development.
