CNPC signs deal with Kazakhstan to expand gas pipeline capacity
BEIJING - China, the world's biggest energy user, has signed an accord with Kazakhstan to expand the capacity of a pipeline network delivering natural gas from Central Asia by more than 80 percent.
The two governments agreed to build the Kazakh section of Pipeline C, which will originate from Turkmenistan and cut through Uzbekistan, China National Petroleum Corp (CNPC), the country's biggest oil and gas producer, said in its online newsletter on Thursday.
The link will flank two existing pipelines running through the three Central Asian nations. China is turning to Central Asia for gas supplies to diversify its fuel sources and help cut the nation's reliance on coal and oil. Turkmenistan started deliveries in December 2009 and is the only country transporting gas to China by pipeline.
The capacity of Pipeline C will rise to 25 billion cubic meters (cu m) a year by December 2015, boosting the network's capacity to 55 billion cu m, CNPC said.
Construction of the 1,305-kilometer Kazakh section will begin early next year and Pipeline C will be operational by January 2014 with an initial annual capacity of 15 billion cu m, CNPC said. China and Uzbekistan agreed in April to expand the network's capacity.
The Central Asian nation, which straddles Turkmenistan and Kazakhstan, signed an accord with CNPC to deliver 10 billion cu m of gas a year, the Chinese company said in a statement in June last year. China is also in talks with Russia for gas supply by pipeline. The negotiations have stalled over pricing disagreements.
CNPC plans to sell 20 billion yuan ($3.1 billion) in 10-year bonds, according to three people familiar with the matter. Sixteen billion yuan will be used to fund the second West-East gas pipeline project and 4 billion yuan will be used to cover operating costs, said the people, who asked not to be identified because the details are private.
China Galaxy Securities Co was hired to manage the bond sale, the people said. China International Capital Corp, China Development Bank Corp, Hong Yuan Securities Co, Guotai Junan Securities Co and CITIC Securities Co are also helping, the people said.
CNPC will finish construction of its second West-East gas pipeline by 2012, the Beijing-based company said in a statement on its website on July 20. Natural gas from Central Asia will reach the Guangxi Zhuang autonomous region and Hong Kong by then, it said.
The oil and natural gas explorer has the equivalent of $82 billion of bonds and loans due to mature by 2042, according to data compiled by Bloomberg.
Its 10 billion yuan of 10-year bonds sold in August 2010 were priced to yield 3.95 percent, Bloomberg data show. The notes were quoted at a yield of 5.89 percent on Sept. 7, according to Chinabond data.
Two telephone calls to CNPC's media department were unanswered.
Bloomberg News
(China Daily 09/09/2011 page15)
