China starts work on third West-East gas pipeline

BEIJING Tue Oct 16, 2012 4:54am EDT

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BEIJING (Reuters) - China National Petroleum Corp (CNPC) started on Tuesday construction of a third cross-country gas pipeline, the Xinhua news agency said, a project estimated to cost 125 billion yuan ($19.93 billion) and aimed at boosting gas imports from central Asia.

The third West-East pipeline, which will span more than 5,000 km starting from the northwestern border in Xinjiang to Fujian province in the southeast, will have a capacity to transport 30 billion cubic meters (bcm) per year.

Construction of the pipeline, which will be linked to the central Asia pipeline, is due to be completed in around 2015 using gas pumped in from central Asia, local media said.

Construction progress of the gas pipelines are closely watched by industry participants, as they play an important role in China's ability to boost its gas consumption in its overall energy mix.

The surge in gas imports from central Asia has also contributed to an impasse in gas pipeline talks between Russia and China, through which Moscow had hoped to sell 68 bcm of gas per year.

China's first West-East pipeline has an annual capacity of 17 bcm and the second West-East pipeline has a capacity of 30 bcm.

China, the world's largest energy consumer, will secure around 30 percent of its natural gas consumption from imports this year, up from just 5.85 percent in 2007, Liu Tienan, head of China's National Energy Administration (NEA), was quoted by local media quoted as saying. $1 = 6.2707 Chinese yuan)

(Reporting by Judy Hua and Fayen Wong; Editing by Ed Davies)

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