Others News
- Oil majors to duel over piped gas
Date: 7-Aug-2007 Sources: (Shenzhen Daily)
SINOPEC is considering building a long-distance pipeline from Sichuan to Guangdong so it can intensify competition with PetroChina Co. for customers in South China's booming natural gas market.
Sinopec wants to sell natural gas from its massive Puguang field in Sichuan Province, China's second-largest gas field in terms of proven reserves, to consumers in Guangdong and the neighboring cities of Hong Kong and Macao.
'If we can find more natural gas reserves there, we will consider the possibility of building such a pipeline,'said Huang Wensheng, deputy director of Sinopec's board secretariat.
Huang declined to comment on a report by the China Daily on Friday saying the National Development and Reform Commission (NDRC), China's economic planning agency, had approved the pipeline.
The report said the first natural gas to Guangdong could be delivered as early as 2009 if feasibility studies support supplies from Puguang to both southern China and Shanghai, which is the destination of a separate pipeline that has already been approved by the NDRC.
If approved, Sinopec's pipeline to Guangdong would compete with the pipeline being built by PetroChina which runs from Xinjiang.
PetroChina's pipeline will initially use gas from domestic fields in the largely desert region before taking 30 billion cubic meters of gas annually from Central Asian nations, including Turkmenistan.
Southern China is increasingly becoming a hotbed of competition between China's largest oil and gas producers. It has traditionally been Sinopec's backyard, with PetroChina concentrating more on its dominant footprint in northern provinces.
Rivalry in the retail market intensified in March, when PetroChina cut pump prices in Guangdong, a tactic that Sinopec copied three months later when it trimmed prices by 0.1 yuan (1.32 U.S. cents) per liter at six gasoline stations in the provincial capital, Guangzhou.
PetroChina is poised to eat into Sinopec's dominance of refining in southern China after regulators earlier this year approved its plan to build a 200,000 barrel-a-day refinery at Qinzhou in Guangxi, which is adjacent to Guangdong.
China's oil titans' willingness to battle for a share of the natural gas market is evidence of strong demand for the cleaner fuel in Guangdong, which has few natural resources of its own and is a long way from coal-producing hubs in the north that supply most of China's energy needs.
China's only operational liquefied natural gas terminal, located at Dapeng in Shenzhen, bought its first-ever spot cargoes this summer after demand for natural gas in the province exceeded contracted supplies.
Sinopec, which recently forged an alliance with China's third-largest oil producer China National Offshore Oil Corp. to invest in gas distribution, may have an edge on price, as the Puguang-Guangdong pipeline would be shorter than the one being built by PetroChina and costs are likely to be lower.
Natural gas accounted for 2.8 percent of China's energy needs in 2005, but an NDRC blueprint published in April targeted an increase in this share to 5.3 percent in 2010.
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