China signs west-east pipeline deal

China has signed a deal with foreign oil giants to pipe gas from far western deserts to the eastern metropolis of Shanghai in a USD 20 billion project to sate a thirst for energy and cut use of dirty coal. The 4000km pipeline will begin at the Tarim Basin in the deserts of the NW region of Xinjiang, wind through eight regions and provinces and cross China’s two largest rivers – the Yellow and the Yangtze – before reaching Shanghai.
It could deliver the first gas to Shanghai as early as the end of 2003, PetroChina, China’s biggest oil producer, stated. The project will eventually pump 12 billion cu m of gas a year and is a major part of China’s plan to boost gas use from 2.5% of the energy mix to around 6% by 2005. Royal/Dutch Shell Group, joined by US major ExxonMobil Corp and Russia’s Gazprom, signed the pipeline agreement with PetroChina and Sinopec in Beijing’s Great Hall of the People. While Shell had been considered the lead partner, each of the three foreign firms will hold a 15% stake in the pipeline. PetroChina will own 50% of the venture, with refining giant Sinopec Corp taking a 5% stake. Although the framework agreement is signed, the companies still have to form the joint ventures that will oversee construction and operation of the pipeline.

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