The West-East Gas Transmission Project, China's largest energy project, received the thumbs-up from the top state planners in Beijing's 10th five-year plan which begins in 2001. Preparatory work has officially started. PetroChina is the pipeline project leader.

The immense project, which will require about $5.5 billion pipeline investment and $7.5 billion downstream investment, will start from the Tarim Basin in northwest China's Xinjiang Uigur Autonomous Region and end in Shanghai, running through the provinces Gansu, Shaanxi, Shanxi, Henan, Anhui, Jiangsu and the Ningxia Hui Autonomous Region.

The project is designed to send gas from the country's major gas production bases in the western and central parts to the economically-developed Yangtze River Delta area as well as the eastern regions.

There are a total of 419bn cu.m. of proven natural gas reserves in the vast Tarim Basin in northwest China's Xinjiang Uigur Autonomous Region. Further exploration in the next five years might increase this figure to one trillion cu.m.

The 4,167-km pipeline is designed to carry 12 billion cubic meters (424 billion cubic feet) of natural gas to Shanghai annually by 2005, and the gas field is expected to provide a steady supply for 30 years. The maximum design capacity of the pipeline will be reached in 2010 when throughput will amount to 20 billion cubic meters (706.32 billion cubic feet) annually.

The project will use pipeline with 1118-millimeter-diameter and gas transmission pressure of 10Mpa. It will require 2.02 million tonnes of steel plate, mainly spiral welded plate and straight slot welded plate.

The project is expected to reach its initial design capacity by 2005. Prices for natural gas in the Shanghai market are estimated to be around 1.3 yuan (16 US cents) a cubic meter by the time the gas distribution network is operational.

According to a PetroChina plan, the pipeline's construction will be divided into two phases, with the first section linking Jingbian and Shanghai to start in 2001 and be completed in 2002 and the second section from Lunnan in Xinjiang to Jingbian to start in 2003.

Foreign partners with a strong standing are invited to participate in the investment, construction and management of the project. Conditions for foreign cooperation include:

(1) Cooperation will be fully open to foreign companies.

(2) Sole ownership by states will not be allowed. Foreign companies can hold major stakes without restrictions on the proportion held.

(3) No limitations will be imposed on the type of foreign cooperation, which can take the form of equity joint venture, contractual joint venture or other forms.