PetroChina,
the nation's largest oil and gas producer, said it is optimistic
about market prospects for the
west-east pipeline project, as the demand in major targeted
areas is larger than expected.
So far, 35 users in Henan, Anhui, Jiangsu and Zhejiang
provinces, and Shanghai have promised a combined gas consumption of
2.1 billion cubic meters for the year 2004, the first year when the
project will start commercial operation, said Huang Weihe, head of
PetroChina's natural gas and pipeline branch company.
The consumption could make the delivery of the gas economically
feasible, Huang said.
The US$5.2 billion project is expected to transport natural gas
annually from remote Northwest China's Xinjiang Uygur Autonomous
Region to Shanghai, as part of the government's strategy to promote
the economic development of impoverished western regions.
PetroChina has signed initial gas supply contracts with 19 of
the 35 users, including a large petrochemical joint venture with
Germany's BASF.
The legal take-or-pay contracts are expected to be concluded as
soon as the central government announces the price package for the
gas, Huang said.
"The market demand is more than satisfactory," Huang said.
He expected the gas consumption to reach 12 billion cubic meters
by 2009, which is the limit for the project to break even.
Earlier this month, PetroChina started trial runs of the east
section of the pipeline.
The east section runs 1,485 kilometers from Jingbian in
Northwest China's Shaanxi Province, winding through six provinces
to end in Shanghai.
PetroChina Chairman Ma Fucai said the commercial gas supply of
the section is expected to start on January 1.
The eastern section will be supplied by the Changqing gas field
in Shaanxi Province until 2005. By then, the 2,525-kilometre-long
western section linking Tarim Basin in Xinjiang to Jingbian in
Shaanxi will be completed and start to supply gas to Shanghai.
Huang said the reserves of Changqing gas field, one of the
nation's largest gas fields, is large enough to meet the market
demand for the pipeline before the western section is
completed.
As of July of this year, Changqing had proven natural gas
reserves of 751 billion cubic meters. It is able to produce 4.8
billion cubic meters of natural gas a year.
As for Tarim Basin, Huang said the area had proven natural gas
reserves of 390 billion cubic meters by the end of last year.
It is now able to pump 12 billion cubic meters of gas annually
for 30 years.
(China Daily October 13, 2003)