China is considering building a massive second pipeline connecting its gas-rich western region with the energy-hungry coast but may have to fill it with imported fuel, an official at PetroChina said on Wednesday.
Domestic major PetroChina is in the early stages of planning the project, with construction - if it goes ahead - not scheduled to start until 2020.
The pipeline would have capacity for up to 26 billion cubic metres, over half China's projected gas output this year, meaning some would have to come from abroad, said the official who declined to be named.
"It is still at a very preliminary evaluation stage, it has not been established as a formal project or been submitted to the National Development and Reform Commission," said the official with knowledge of the project.
One route under consideration would take the gas to Guangzhou, capital of China's export hub Guangdong, but other options including neighbouring Fujian province are also under consideration, he added.
However, in Guangzhou it would be in competition with liquefied natural gas shipped into the country's pioneering terminal for the super-cooled fuel, due to open next year.
And although China is trying to boost the portion of its energy produced by relatively clean gas, from only about 3 percent now to 8 percent by 2010, critics have warned that incentives may not be strong enough to balance higher prices.
The country is pushing gas usage among households, but because their demand fluctuates, success depends more on substantial uptake from industry - which can be dependent on subsidies or regulations that make it more competitive.
Outside Guangdong the first blush of enthusiasm for gas is fading as global markets rise, even though CNPC, PetroChina's parent company, has said China would produce 85 bcm annually by 2010 and 100 bcm by 2015.
Foreign firms including Royal Dutch Shell, US major Exxon Mobil and Russia's Gazprom were ejected from the first, $8 billion, West-East project.
But foreigners will almost certainly have to be involved in supplying the new one, because the gas fields of Xinjiang's vast desert are already being tapped to feed the first pipeline to Shanghai and other east coast cities.
It will reach its designed capacity of 12 billion cubic metres a year in 2007 and capacity was expected to be expanded to 17 billion cubic metres after that, state media has said.
The new pipeline, which could cost more than $5 billion, will likely be topped up with imported gas from Russia and Kazakhstan, the China Daily said in a report. Gazprom said in September it was in talks about laying two pipelines to China, which could each send up to 30 billion cubic metres (bcm) of gas per year across the border. One possible route was through Xinjiang to feed the west-east pipeline.
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