PetroChina Begins Construction of Zhongxian-Whuan Pipeline

PetroChina has commenced the construction of its Zhongxian-Wuhan Gas Pipeline project. An inception ceremony was held in Yichang, Central China's Hubei Province.

Officials from the State Development and Reform Commission (SDRC), local and municipal government officials from Chongqing, Hubei and Hunan provinces, representatives of the constructors attended the ceremony. PetroChina's management issued the official order for the commencement of construction at the ceremony.

The Zhongxian-Wuhan Gas Pipeline is one of China's key infrastructure projects. It is an energy trunk line linking Sichuan-Chongqing gas fields with Hubei and Hunan provinces. The construction of the pipeline signifies the full launch of another long distance gas transmission pipeline PetroChina invests and builds after West-East Gas Pipeline project.

With a planned annual capacity of 3 billion cubic meters, the 711-mm diameter trunk line stretches 718.9 kilometers from Zhongxian to Wuhan. The project also has three branches reaching from Jingzhou to Xiangfan (210 kilometers), Qianjiang to Xiangtan (340.5 kilometers), and Wuhan to Huangshi (77.9 kilometers), making the total length of the pipeline 1,347.3 kilometers. The Zhongxian-Wuhan pipeline will pass along 16 administrative regions in Chongqing and Hubei at county level or above. The trunk line and the Xiangfan and Huangshi branches of the project are scheduled to be put into operation by 30 December 2004, to supply commercial natural gas to users in Wuhan and other cities along the pipeline. The Xiangtan branch will start operation on 1 July 2005, supplying gas to users in Changsha and cities along the pipeline.

The gas to be transported by the Zhongxian-Wuhan pipeline originates from Sichuan Basin. With total reserves exceeding seven trillion cubic meters, the Basin has 680 billion cubic meters of proven reserves. All the users of the pipeline are in Hubei and Hunan provinces. PetroChina has signed gas-supplying contracts with 27 users there. The gas offered by the pipeline will be used mainly for petrochemical, power generation, building materials, metallurgy, and urban fuel projects.

The natural gas reserves owned by PetroChina in Sichuan Basin not only can meet the current and the potentially higher demand in future, they can also be transmitted to other areas to provide stable gas supply.

The construction of the Zhong-Wu pipeline will transform PetroChina's natural gas resources in Sichuan and Chongqing areas into economic benefits, further developing the Company's natural gas business. The introduction of a clean and high quality energy source to Hubei and Hunan provinces will significantly improve the energy mix, protect the environment and facilitate local economic development.