PetroChina and Shell Reach Agreement on Chinese Pipeline

PetroChina has reached an agreement with a Shell-led consortium to undertake a huge natural gas pipeline project in China. The consortium includes Shell International Gas Ltd, Russia's Gazprom and Hong Kong & China Gas Co.

The company said the total cost of the project has yet to be finalized, but it is estimated at approximately US $18 billion.

Construction of the 2,600 mile from the west to the east coast of China will begin in the first half of this year, with gas deliveries to the financial hub of Shanghai expected in early 2004. The agreement also includes joint exploration and development of gas fields under production sharing contracts. The parties will also set up a co-operative joint venture and a unified sales company for natural gas. The joint venture and the sales company will each have a term of 45 years.

PetroChina will have a 55 percent stake in the project, while the consortium will hold the remaining 45 percent.