The Chinese oil giant PetroChina is moving forward in the selection of a foreign partner for its US$14 billion west-east gas project.
The company said on Tuesday in a statement that it has signed memoranda of understanding (MOU) with four foreign consortia, including consortia led by BP Global Investments Ltd, Exxon Mobil China Gas Pipeline Ltd, Russian PJSC Gazprom and PJSC Stroitransgaz and Royal Dutch/Shell's Shell International Gas Ltd.
"Each MOU is a preliminary agreement which establishes intentions in respect to potential investment in the project by the consortia and sets out the process and timetable for partner selection going forward," the statement said.
PetroChina is building a 4,200-kilometre pipeline that will stretch from the western region of Northwest China's Xinjiang Uygur Autonomous Region to Shanghai in the east. The project is expected to anchor the Chinese Government's drive to develop the resource-rich but economically backward western areas.
Tony Hayward, vice-president of BP Group, said the signing of the MOU does not mean PetroChina has finally settled on foreign partners.
"We are pleased to be able to go to the next phase of negotiation and study on the project. But it is a big and complicated project that may take some time to decide on foreign partners," Tony said.
Gary Dirks, president of BP China, said the project will be participated in by several foreign partners because of its large scale and complexity.
Last month, PetroChina initially selected BP, Shell, and Exxon Mobile for negotiation, and added the Russian consortium and Hong Kong & China Gas to the negotiation list three weeks later. Hong Kong & China Gas joined the bidding with Shell, which initially bid on its own.
The BP consortium, initially formed by three Japanese companies, Mitsubishi, Itochu and Nissho Iwai, is counting on Nissho Iwai's expertise in large energy projects, including natural gas trading and infrastructure projects, to strengthen its bid.
Tony said BP is expected to participate in all aspects of the project, including gas exploration and production, pipeline construction and marketing.
BP, a shareholder in PetroChina, is expected to form a joint venture with PetroChina to market the gas from the project, Tony said.
The Chinese Government wants the west-east gas pipeline project to start construction in October, and to deliver gas to Shanghai by 2003.
In early June, PetroChina said it plans to issue shares on the domestic market, with proceeds possibly exceeding 10 billion yuan (US$1.21 billion), to fund the project.
(China Daily 07/26/2001)
