Foreign companies bow out of pipeline

Allen Baker

Gazprom, Royal Dutch/Shell and ExxonMobil won’t be taking stakes in a $5.2 billion gas pipeline that crosses much of China, the companies said Aug. 3.

The three companies had agreed in July 2002 to each take a 15 percent share of the PetroChina Co. project, pending a final agreement. But no agreement was reached and PetroChina is now financing the project with its own money instead.

It wasn’t clear just what led to the breakdown, with some reports that the international partners wanted a bigger return on their investments, and others saying PetroChina had found more reserves in Xinjiang and no longer needed Western partners.

The pipeline runs 2,500 miles from Xinjiang in northwestern China to Shanghai and other market along the eastern coast. PetroChina says it has signed contracts for up to 6.7 billion cubic meters of gas annually from the line, which can transport up to 12 billion cubic meters a year.

The pipeline was completed Aug. 3, according to the Xinhua news agency, a year ahead of schedule. It will go into trial operation in October, with full use expected by the first of the year. Construction began two years ago.

Natural gas to fill the line will come from the Tarim basin in Xinjiang and the from the Changging field in central Shaanxi province, along the route.

Proven reserves at Tarim now total 658 billion cubic meters, and potential reserves are estimated at 8.4 trillion cubic meters, about a quarter of the country’s land-based reserves, according to Chinese officials.