March 17, 2000

SINGAPORE -- China aims to complete construction of a
4,200-km (2,625 mile) natural gas pipeline by the end of 2003, ahead of an
original 2007 target, Chinese industry sources said on Friday.
The pipeline begins in the Tarim basin in northwest Xinjiang and runs
through the provinces of Gansu, Ningxia, Shaanxi, Shanxi, Henan, Anhui,
Jiangxu to Shanghai.
The sources said the government decision to push ahead with the
billion-dollar project was aimed at speeding up investment in the country's
underdeveloped provinces.
Chinese Premier Zhu Rongji told a news conference in Beijing on Wednesday
that foreign investment would be welcomed in the project.
"You (foreign investors) can invest, you can hold a majority stake, you can
manage the project...I believe the pipeline has a very high rate of return,"
Zhu said, without elaborating.
China has so far not drawn up policies that allow foreign investors to
participate in domestic gas distribution or to take a majority stake in the
pipeline project.
The State Development Planning Commission (SDPC), China's macroeconomic
planner, is expected to assemble governors of related provinces next weekend
in Beijing.
"This would be more of a political gathering in which Beijing will call for
cooperation, mainly in terms of land use, from provincial heads so that
building a pipeline as long as this one would be carried out smoothly," said
one Beijing-based industry source close to the project.
SDPC formed a special task force earlier in March charged with leading the
project, which will cost an estimated 300 billion yuan ($36 billion), the
sources said.
The team is led by SDPC Chairman Zeng Peiyan.
Chinese official media said in February that the Tarim Basin, the key supply
source for the pipeline, had an accumulated proven reserve of 419 billion
cubic metres.
But industry sources said this has yet to be fully appraised.
The first phase of the project would be to build a trunk line with a
capacity of 12 billion cubic meters a year, the official media said.