$20 Billion Gas Deal By Shell

Chinese oil major PetroChina is expected to sign a deal with a Shell-led consortium for a $20 billion gas pipeline this month and start construction in early July, industry officials said yesterday.

The agreement, aiming at setting up a joint venture between PetroChina and the consortium led by Royal/Dutch Shell to build a 4,000 km pipeline, would also include cooperation in production and sales, they said.

The planned pipeline from the northwestern region of Xinjiang to the eastern city of Shanghai would move 12 billion cubic metres of gas a year.

A PetroChina official said in May the Chinese firm had agreed in principle to let Shell operate the Kela-2 gas field and four other condensate fields in Xinjiang for the first two years of operation.

The Shell consortium, which will take a 45 per cent stake in the pipeline project, also includes Russian firms Gazprom and Stroytransgaz and Hong Kong & China Gas Co Ltd.

ExxonMobil was in talks with Shell to join the consortium and was likely to sign a pact soon, officials said.

"We hope to join the consortium as a equal status partner," a Exxonmobil official told Reuters.

PetroChina began trial construction of the pipeline in February in delicate wetlands and on crossings for the Yangtze, Yellow and Huai rivers.

The first gas is scheduled to arrive in Shanghai in early 2004 from the Changqing field in the northern province of Shaanxi.

Changqing, China's largest gasfield, has proven gas reserves of the 750 billion cubic metres.

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