According to Shi Xingquan, vice-president of PetroChina Company Ltd, 19 foreign energy companies had submitted responses to the tender offer by the end of last month, expressing their willingness to join in the construction of the 4,170 kilometre-long pipelines.

All the applications came from big name companies, such as BP Amoco, Royal/Dutch Shell Company, Exxon Mobil and the France-based TotalFinaElf Oil Company, Shi said.

"The bid winners will have the option to co-operate with PetroChina in exploring five oilfields in Xinjiang's Tarim Basin, the major gas tap for the project, such as the Kela-2 and Yaha gas fields," Shi added.

"But PetroChina will hold a dominant stake in the gas exploration," he added.

Last year, the State announced that for this project foreign investors would be allowed to control stakes in the construction and operation of the project, which aims to pipe 12 billion cubic metres of natural gas annually from the Tarim Basin to Shanghai and the Yangtze River Delta by 2005. Overseas investment will also be allowed for urban gas pipeline networks.

These are two significant breakthroughs in China's current policy framework, as according to current State regulations Chinese companies should keep the controlling stake in pipeline construction and foreign capital is prohibited in urban gas pipeline networks.

"Foreign investors will also be able to enjoy preferential policies granted specifically to west development projects, such as favourable conditions in relation to taxation, land use and equipment imports ," Shi added.

At present the scheme, to be completed by 2004, has been carried out to schedule, Shi said.

"The scientific research report is expected to be completed by April and the company will by June have picked its partners from the overseas bidders," Shi noted.

He said the construction of the east and west routes will begin simultaneously "in the fourth quarter of this year."

The east route will extend from Jingbian, Shaanxi Province, to Shanghai and the west route will run from Jingbian to Lunnan in the Tarim Basin.

Shi also revealed that the State is drafting policies concerning environmental protection and taxation to nourish the consumer market for natural gas.

With the launch of the project, China is expected to increase the proportion of natural gas in its total energy consumption from the current 2 per cent to 4 per cent by 2004.

(China Daily February 14, 2001)