By the OGJ Online Staff
HOUSTON, Feb. 5 -- PetroChina Co. Ltd., Hong Kong, has approved the feasibility study for a $14 billion West-to-East gas pipeline and signed an interim pact with a Shell International Gas Ltd. consortium.
The project would produce gas from the Tarim basin of western China and move it to Shanghai via a 4,000 km pipeline.
PetroChina signed an interim agreement Dec. 29 with a consortium that includes Shell International Gas, OAO Gazprom, OAO Stroytransgaz, and Hong Kong China Gas Co. Ltd. PetroChina said it is in the process of selecting other participants.
The proposals covered by the interim agreement include selecting a 55:45 PetroChina-foreign partner production-sharing contract model for the E&D portion of the project; forming a pipeline joint venture and a unified sales company; establishing the proposed shareholding interests in those companies; selecting 45 years as the term of the two joint ventures; and agreeing that all parties will comply with Chinese health, safety, and environmental laws and social standards.
Terms such as the level of investments have not been finalized.
Meanwhile, PetroChina will begin construction on crossings at the Yangtze, Yellow, and Huai rivers as well as the construction of the Jiangsu-Shanghai section and the Lunnan-Kuerle section in Xinjiang.
The project has begun an internet bidding process "for the purchase of vast amount of raw materials required for construction." Construction teams have been selected. PetroChina will use a third-party to supervise construction quality.
PetroChina plans to begin construction in the first half, begin operation of the Jingbian-Shanghai section in early 2004, and complete the Lunnan-Jingbian section by the first half of 2005.
