PetroChina upbeat on pipeline operation

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Last updated at: (Beijing Time) Monday, March 08, 2004

PetroChina upbeat on pipeline operation

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Top Chinese oil firm PetroChina said Saturday revenues would get a boost when full commercial operations at its mammoth US$8 billion West-to-East gas pipeline begin ahead of schedule before the end of this year.

"This is equivalent to developing our market ahead of schedule," PetroChina chairman Ma Fucai said. He did not provide figures.

Ma, also president of China National Petroleum Corp. (C NPC), the parent of PetroChina, said CNPC still hoped a planned oil pipeline from Siberia to China would go ahead, despite Russia saying recently that it planned to link the pipeline with Japan instead.

He said the group would continue to search for oil and gas overseas, adding CNPC group had set a production target of 35 million tons from overseas sources next year, compared with 25 million tons last year.

PetroChina's 4,000-km West-to-East gas pipleline will link gas fields in the Xinjiang region in western China to the energy-thirsty east.

PetroChina started pumping gas into the 1,600-km section of the pipeline that runs from Shaanxi Province to Shanghai last October and had said it would start sending gas through the 2,330 km western section from the remote Tarim Basin in Xinjiang in early 2005.

"It's slightly positive news, as they have more time to market the gas," said Russell Young, analyst at Nomura International, which has a "neutral" rating on PetroChina.

But another analyst said there was still not enough demand for gas in coal-reliant China, where authorities are eager to expand the use of cleaner burning fuel.

China is encouraging people to switch to gas for residential use, as industrial users are reluctant to switch from cheaper fuels.

Ma said talks on the pipeline link with Russia would speed up after Russian presidential elections this month, despite the recent statement from Russia regarding Japan.

"The Russian news is non-official. We are still waiting for a Russian reply, and that is expected after the presidential election," Ma told reporters.

Fast-growing China is the world's second-largest consumer of oil. A heavy importer from the Middle East, the country is keen to secure supplies from Russia.

Last month, Russian Energy Minister Igor Yusufov said China had been ruled out for environmental reasons.

Top Russian oil producer YUKOS was a proponent for the planned 600,000-barrels per day (bpd) US$2-US$3 billion route to China. The route to Japan is estimated to cost US$5-US$7 billion and would have capacity of one million bpd.

Source:Xinhua

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