With the 4,000-km natural gas pipeline officially going into commercial operation Thursday, China expects to see a boom in its budding natural gas market.
"Now our top worry is that the current gas transmission capacity cannot meet the soaring demand of the consumers," said Su Shulin, vice president of China National Petroleum Corporation (CNPC).
Such a good market is unexpected when the West-East Natural Gas Transmission Pipeline project broke ground two years ago. At that time, there were a host of worries among local users on the pricing mechanism and supply system, which were resulted from the higher price of natural gas compared with other fuels such as coal, poor rules and regulations on natural gas market and deficient experience on guaranteeing stable gas supply of such big and long pipelines.
"So far, 40 consumers have signed natural gas sale contracts with the CNPC. The designed annual gas transmission capacity of 12billion cubic meters of the project has been sold out. We will realize the designed transmission capacity next year, one year ahead of the original schedule," said Su.
According to Su, the income of the project has met the cost this year and it will make profits in 2005.
"To meet the rising demand of the users," acknowledged Su, "we will increase the annual gas transmission capacity to 18 billion cubic meters by the end of 2006 with the completion of ten compressor stations."
Experts acknowledged that a growing energy demand of China's eastern and central regions, which boast striking economic growth rate, is the major reason for natural gas to be accepted so soon.
Moreover, the soaring international oil and coal price is another reason for the ready acceptation of natural gas as a substitute in the fuel market, said Prof. Huang Zhen, deputy director of the School of Mechanical Engineering of Shanghai Jiaotong University.
The completion of the West-East natural gas pipelines also spurred the construction of other local gas pipelines, laying a foundation for the further expansion of the natural gas market, said Prof. Huang.
So far, China's natural gas market has benefited a lot from the project.
For example, the gas market in Zhengzhou, capital of central China's Henan Province, witnessed a sharp rise of its annual natural gas use of 50 to 60 million cubic meters with the West-East gas pipelines running through, since it has remained a consumption of 80 million cubic meters for a dozen of years.
East China's Shanghai municipality, one of the biggest users of the project, saw 300,000 families begin to use natural gas this year, increasing the number of families using natural gas in this city to a total of 1.3 million.
Moreover, many earlier users began using natural gas from the west last year have greatly increased their order.
The Zhengzhou Gas Co. and Anyang Color Picture Tube Bulb Group Co. Ltd, two users in central Henan Province both claimed a demand of 220 million and 270 million cubic meters respectively in 2005, sharply up from their original plan of 200 million and 270 million cubic meters respectively in 2007.
In the First Youth Forum of the World Petroleum Congress held in Beijing this October, George Verberg, president of the International Gas Union said that the gas transmission project from the west to the east has quickened the development of natural gas infrastructures, which will greatly expanded China's natural gas market.
Despite such predictions, the striking growth of China's natural gas market still exceeds the expectations of many people.
A report made by 61 users of the West-East pipeline project shows that by 2010, their demand for natural gas will reach 29.8 billion cubic meters, and the figure will rise to 50 billion in 2020. It means that by then there will be a large gap between demand and supply in China's natural gas market.
The huge potential of China's natural gas market has drawn great attention from the overseas enterprises.
"Boasting a population of 1.3 billion, China is such an enchanting market," said Dr. Neil Beveridge, director of Gas Marketing of the Russia Petroleum Joint-Stock Market.
Seeming to be a proof, with the West-East pipeline project being put into commercial operation, projects importing liquid natural gas were launched in many regions of China including east China's Shanghai Municipality, Zhejiang and Shandong provinces in east China, northeastern Liaoning Province and North China's Tianjin Municipality, after south China's Guangdong and southeastern Fujian provinces.
"The development of the natural gas market will relieve the pressure put by China's soaring energy demand. It is of vital importance for China to establish a multi-channel energy supply framework," said Yang Qing, a researcher with the Energy Institute of the National Development and Reform Commission.
(Xinhua News Agency December 31, 2004)
