The 2,480-mile pipe from the western province of Xinjiang to Shanghai on the eastern coast offers an opportunity in China's gas market, the second-fastest growing in Asia. China now burns coal for more than 70 percent of its energy.
The three companies, which posted net income of $41.5 billion last year, are seeking ways to spend that windfall, particularly in Asian markets that offer greater opportunities for growth than those in the West. In addition to the pipeline, the winner gets to drill in China's largest natural gas field.
Exxon Mobil teamed up with Hong Kong-based CLP Holdings Ltd.; BP formed an alliance with Malaysia's Petroliam Nasional Bhd., and Japan's Mitsubishi Corp., Itochu Corp. and Nissho Iwai Corp.; while Shell submitted its bid alone.
BP, Shell and Exxon, which have already spent more than $5 billion establishing a foothold in China, would have to pay off the costs of building the pipeline with profits from an equity stake.
"The three companies were chosen based on their commercial experience and their financial strength," said Cao Zhengyan, a spokesman for PetroChina, which controls the pipeline project.
PetroChina, the country's No.1 oil company, said last month it received initial bids from 12 companies in seven groups for the project. Beijing wants to operate at least part of the development by 2003.
Most Popular Articles