Petronas, ExxonMobil seek stakes in China pipeline

Malaysia's Petronas Carigali Sdn. Bhd, and ExxonMobil Corp. separately are seeking participation in the $5.6 billion west-east natural gas pipeline project in China.

May 24, 2002

2 min read

By an OGJ correspondent

BEIJING, May 24 -- Malaysia's Petronas Carigali Sdn. Bhd, and ExxonMobil Corp. separately are seeking participation in the $5.6 billion west-east natural gas pipeline project in China.

The megaproject involves development of natural gas fields in the Tarim basin in the Xinjiang region of western China and the Ordos basin in central China, construction of a 4,167 km pipeline from these fields to emerging markets in and around Shanghai in eastern China, and gas market development in the East (OGJ Online, Feb. 5, 2002).

Pipeline construction began late last year and is scheduled for completion in early 2004.

Hong Kong-based PetroChina Co. Ltd.—a subsidiary of China National Petroleum Corp., China's largest producer—holds a 55% stake in the project, and a consortium composed of Shell International Gas Ltd., Russia's OAO Gazprom and OAO Stroytransgaz, and Hong Kong & China Gas Co. holds the remaining 45%.

Shell currently is conducting talks with Petronas regarding the possibility of the latter's assuming an ownership interest in the west-to-east pipeline project. Talks are in the initial stage, and Petronas's participation would also be subject to PetroChina's approval.

Petronas previously was part of a BP PLC-led consortium bidding for a stake in the project, but last September BP withdrew from the bidding, saying it couldn't add value to the project. Soon after BP's withdrawal, PetroChina issued a statement saying that Petronas was still interested in participating.

PetroChina also had short-listed a consortium of ExxonMobil China Gas Pipeline Ltd. and Hong Kong's CLP Holdings Ltd. last June (OGJ Online, June 5, 2001), and ExxonMobil said it still wants to participate in the project.