Indian gas giant eyes partnerships in China
By Wang Ying (China Daily)
Updated: 2006-02-23 05:52

India's biggest gas distributor, Gas Authority of India Limited (GAIL), is actively exploring the business potential in China and beyond through the partnership with three Chinese energy heavyweights, and a joint venture (JV) expected to be set up within this year in Beijing.

The Indian gas company expects to sign an agreement with Beijing Gas Group Company Ltd "within months" to set up a JV to meet the surging gas demand in the capital city, S. Prabhakar Rao, director for projects from GAIL, told reporters yesterday on the sidelines of an oil and gas transport summit in Beijing.

Moreover, GAIL is looking to build a liquefied natural gas (LNG) terminal in China for gas imports through a potential partnership with Asia's biggest oil refiner Sinopec, the director said. And on the upstream oil and gas exploration front, Rao said GAIL hopes to work with the country's biggest offshore oil producer, China National Offshore Oil Corp (CNOOC), to develop offshore oil and gas projects in Indonesia and Australia.

Sang Jinghua, spokesman of Sinopec, yesterday said that he was not aware of the possible deal. "I don't know whether the high-level executives (of both companies) have met or not," he said.

Spokespersons from CNOOC and Beijing Gas yesterday were not available for comment.

"We hope to finalize the JV agreement with Beijing Gas within this year," Rao said.

GAIL wants to participate in the compressed natural gas (CNG) and piped natural gas (PNG) projects in Beijing by working with Beijing Gas, the biggest gas distributor in the capital, Rao told the oil and gas summit yesterday.

Rao said the Indian gas firm has yet to determine its shares in the new JV with Beijing Gas.

GAIL last month signed three memorandum of understanding (MoUs) with three Chinese firms, including Asia's biggest oil refiner Sinopec, China National Offshore Oil Corp (CNOOC) and Beijing Gas, to tighten a future partnership in the gas market.

GAIL is sourcing opportunities in terms of city gas distribution, oil and gas exploration, and production as well as LNG supply and facility building, both inside and outside China, Rao said.

For the possible LNG project, Rao said there was not a concrete project under discussion yet, but their "most potential partner" would go to Sinopec.

"We are exploring the possibility and once there is something, we would like to examine and to take part (in the LNG project)," Rao said.

Two LNG terminals are now under construction in Guangdong and Fujian provinces of South China, which belong to CNOOC. And eight others are also being planned along the eastern coast, among which Sinopec and its domestic rival PetroChina each own three, industry analysts said.

The fast-growing Chinese economy offers great market potential for the cleaner natural gas to cut the country's heavy reliance on the air-polluting oil and coal. China is expected to need 120 billion cubic metres (bcm) of natural gas by 2010, 67 per cent of which will be pumped from the country's domestic gas reserves.

To meet the large demand, the country has to build cross-nation pipelines or LNG terminals to import gas from foreign countries.

But Liu Hequn, vice-president of the planning institute with China National Petroleum Corp, said the high crude oil prices may delay the start-up operation of these planned LNG projects, due to possible disagreements over prices.

(China Daily 02/23/2006 page10)