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PetroChina - No Guarantee Shell Talks on West-East Gas Project Will Succeed

[WTN-L World Tibet Network News. Published by The Canada Tibet Committee. Issue ID: 01/12/22; December 22, 2001.]


19 Dec 01 - 12:00 BEIJING (AFX-ASIA) - PetroChina Co Ltd said there is still some way to go before it can sign a contract with a consortium led by Royal Dutch/Shell Group to co-develop the planned west-east natural gas pipeline project, and there is no guarantee at this stage that the talks will be successful.

Earlier, the Hong Kong Economic Times quoted PetroChina vice president Wang Fucheng as saying the company had reached an agreement in principle with the consortium to build the 4,170 km pipeline. A spokesman for PetroChina in Beijing said that while the two sides have reached a general agreement expressing their intention to cooperate, there is "still a lot of work to do" before the parties settle the details. "At the moment, the talks seem to have been very successful, but there is still some distance to go before the signing of a contract," he said. PetroChina cannot guarantee at this stage that the talks with Shell will be successful, the spokesman added, noting that the company's talks with BP Amoco PLC over cooperation on the pipeline were also successful in the initial stages, until BP "suddenly withdrew" from the talks. He said the company could not disclose how large a joint venture it would have with Shell, or what stakes the parties would hold, since no contract has yet been signed. Any contract would also require approval from the companies' boards and shareholders. "So we are still a long way from publishing an announcement on this," the spokesman said. No one from Shell's office in Beijing was available for comment.

The west-east gas pipeline project, estimated to cost between 14-18 bln usd, has been earmarked as one of the state's main infrastructure projects to help develop the country's western regions, delivering natural gas from Xinjiang's Tarim Basin to the Yangtze River Delta region.

PetroChina initially expected to start construction of the pipeline in September, but has suffered a series of setbacks and delays, including a decision by BP Amoco to pull out of talks on taking a stake in the project in September. In October, the State Development Planning Commission decided to delay the launch of the pipeline project until the year-end in order to allow more time for negotiations with potential foreign investors. The commission said there was still much work to do to convince investors that the project was viable, noting that the key issue at stake was the pricing of natural gas supplied by the pipeline to parts of eastern China. But it hoped to officially launch construction by the end of the year. According to the current guideline gas prices for the project, the gas will be sold for above 1.3 yuan per cubic metre in Shanghai, and at prices higher than that in Zhejiang province, but many gas consumers have said these prices are too high. bur/tw/nma/jv AFN

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