China's biggest oil-and-gas firm, PetroChina, has signed new gas deals for its multi-billion dollar West-to-East pipeline, to take total sales to 62 percent of planned capacity, company officials said Thursday.

Earlier this month, PetroChina sealed take-or-pay contracts with buyers in the eastern provinces of Jiangsu, Zhejiang and Anhui, Shanghai Municipality and the central province of Henan, they said.

That takes total agreed sales from the 4,000km pipeline, stretching from Xinjiang in the west to Shanghai in the east, to 7.4 billion cubic meters (bcm) by 2007.

"That would account for 62 percent of the designed total capacity of 12 bcm," said a Beijing-based PetroChina official.

He said the gas buyers included city gas distributors and China Huadian Corp., parent of Hong Kong-listed Huadian Power International Corp. Ltd. (1071.HK).

Another PetroChina official said the company had signed similar deals late last year with buyers, including gas distributor Zhengzhou Gas (8099.HK) in Henan Province.

PetroChina has now signed 20 take-or-pay contracts on gas sales from the pipeline.

Analysts had expected the residential sector to be the main end user of the gas, because sales to the power sector would have to compete with the cost of coal, used by most of China's electricity producers.

PetroChina started pumping gas into the 1,600km section of the pipeline running west from Shanghai to Shaanxi last October.

The firm said in November it was on track to start sending gas into the 2,330km western section from the remote Tarim basin in northwest Xinjiang in early 2005.

In September, Beijing cut the average cost of gas from the pipeline by about 1.5 percent to 1.27 yuan per cubic meter, after potential users complained about prices.

Under a framework pact signed in July 2002, PetroChina owns half the pipeline, while Royal Dutch/Shell, Exxon Mobil and gas giant Russia's Gazprom each holds 15 percent.

China's second-largest oil and gas firm Sinopec Corp. holds five percent. However, PetroChina has yet to sign formal agreements with the foreign shareholders to invest in the project.

(Shenzhen Daily January 30, 2004)