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New Delhi, Wednesday, January 09, 2002
PetroChina, Royal Dutch Shell ink preliminary gas pipeline deal
Singapore, Jan 8: Petrochina and Royal Dutch/Shell Group have signed a preliminary deal to lay a 4,000-km gas trunkline from the West to the east of China, an industry source close to the deal said on Tuesday. The agreement, inked on December 31 in Beijing, included joint exploration and development of gas fields in the Xinjiang Uighur autonomous region, as well as construction of the trunkline from Xinjiang to Shanghai, the source said. The source said Shell and Russian gas giant Gazprom were in the foreign consortium, which will take 45 per cent in the project. PetroChina will hold 55 per cent. A Shell spokesman based in Beijing declined to confirm the signing of the deal, but said negotiations between Shell and PetroChina had "achieved significant progress". The behemoth project has strong backing from the Chinese government and is estimated to cost some 150 billion yuan ($18 billion). The $5.6 billion trunkline will pipe gas from the barren deserts of Xinjiang, while transferring some of the wealth from booming eastern provinces as it provides sustainable economic growth in western regions. The industry source said US oil major ExxonMobil Corp, which also was in the running for a slice of China's biggest energy project, was not among the foreign participants. Shell represented all the partners in two foreign consortia, one led by Shell and the other by ExxonMobil, which were invited by PetroChina last year to bid for the project. Shell's consortium included Gazprom and Hong Kong & China Gas Co Ltd while Exxon's group included Hong Kong-listed CLP Holdings. In December, a top PetroChina executive said the company expected both Shell and ExxonMobil to participate in the project. "ExxonMobil was not in this preliminary agreement. Whether it will join later depends on future developments," the source told Reuters by telephone
from Beijing. A Beijing-based ExxonMobil spokeswoman said, "What I can say is that foreign partner selection is not finalised...We have not been informed by PetroChina that foreign partner selection is completed." - Reuters
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