Shell and PetroChina To Enter Pipeline Agreement

PetroChina is expected to sign a deal with a Shell-led consortium for a $20 billion gas pipeline and start construction in early July, industry officials said. The agreement call for a 2,500 mile pipeline to be built and would also include cooperation in production and sales. The planned pipeline from the northwestern region of Xinjiang to the eastern city of Shanghai would transport 12 billion cubic meters of gas a year. Earlier this year it was announced that PetroChina had agreed in principle to let Shell operate the Kela-2 gas field and four other condensate fields in Xinjiang for the first two years of operation. The Shell consortium, which will take a 45 percent stake in the pipeline project, also includes Gazprom and Stroytransgaz and Hong Kong & China Gas Co Ltd.

PetroChina began trial construction of the pipeline in February in delicate wetlands and on crossings for the Yangtze, Yellow and Huai rivers. The first gas is scheduled to arrive in Shanghai in early 2004 from the Changqing field in the northern province of Shaanxi. Changqing, China's largest gasfield, has proven gas reserves of the 750 billion cubic meters.