PetroChina optimistic about downstream market
( 2003-10-01 10:01) (Xinhua)
PetroChina is quite
optimistic about the downstream market of the west-east gas pipeline since the
potential demand for natural gas from western China has turned out to be much
larger than expected, an executive of the internationally listed arm of China's
largest oil company said Tuesday.
Huang Weihe, head of PetroChina's natural gas and pipeline branch, said that
so far, the company has inked draft take-or-pay contracts with 19 out of the 35
end users that signed letters of intent with PetroChina.
Once the central government reissues a guidance price for the gas to be sent
from west China to the eastern coastal areas, formal and legally binding
take-or-pay contracts will be signed with the 19 gas purchasers, he said.
The draft contracts signed in mid-September show that demand for the gas will
amount to 2.1 billion cubic meters in 2004, the first year after the commercial
operation of the west-east pipeline.
The central government is expected to circulate a document within days, in
which the average guidance price will be lowered from the formerly set 1.29 yuan
per cubic meter to 1.27 yuan per cubic meter, and a new pricing system would be
introduced where gas price will be hooked up with the price swings of crude oil,
liquefied petroleum gas and coal, Huang said.
The PetroChina executive also reveals that the actual investment of the
pipeline is controlled within the expected limits, and the 12 percent return
interest stipulated in the feasibility study of the pipeline can be reached.
According to the feasibility study of the project, the investment in the
upstream sector was pinned at 28 billion yuan (3. 4 billion US dollars) and the
midstream investment was pinned at 46.5 billion yuan (5.6 billion US dollars).