Gazprom & Oil Majors Out Of China JV.A consortium comprising Royal Dutch/Shell Group, ExxonMobil Exxon Mobil Corporation or ExxonMobil (NYSE: XOM), a multi-national American corporation and a direct descendant of John D. Rockefeller's Standard Oil company[2] and Gazprom JSC Gazprom (RTS:B>GAZP MICEX:B>GAZP LSE: OGZD; Russian: ОАО Газпром, sometimes transcribed as Gasprom[1] were on Aug. 2, 2004, asked by state-owned PetroChina to pull out of its $5.25 bn West-East natural gas pipeline venture. A Shell official was on Aug. 3 quoted by Dow Jones Newswires Dow Jones Newswires is the real-time financial news organization owned by Dow Jones. Founded in 1882, its primary competitors are Bloomberg L.P. and Reuters. The company reports more than 420,000 subscribers -- including brokers, traders, analysts and fund managers -- as of July as saying: "PetroChina issued a letter of termination for the joint venture agreement yesterday". The Shell official said all parties to the negotiations regreted that they had been unable to reach an agreement on the project but looked forward to future opportunities for co-operation. Despite the failure to reach an agreement on the project, the official said Shell's energy business will continue to grow in mainland China. The official announced: "We expect that the total funding for the Shell share of projects in China during 2004 will amount to $1 billion, the highest-ever in a single year". He said Shell will continue to enhance its relationships in China and remained very positive about the potential in China. However, China-based industry executives said even though the consortium's withdrawal from the project will have little impact on the operation of the gas pipeline, it will hurt the confidence of foreign companies to invest in China's energy sector in the long run. "PetroChina is cash-rich and isn't concerned about foreign participation in the project now because it has already begun operating (the pipeline)", said an executive with a Shanghai-based energy consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a . The executive added that foreign energy companies needed to realise that negotiations for energy projects in China may drag on Verb 1. drag on - last unnecessarily long drag out last, endure - persist for a specified period of time; "The bad weather lasted for three days" 2. for several years without leading anywhere. The West-East gas pipeline The West-East Gas Pipeline is a 4,000-kilometers long pipeline, which runs from Lunnan in Xinjiang to Shanghai.[1]}} The pipeline pass through 66 counties in the 10 provinces in China. was China's first gas project open to foreign investment, as was encouraged by former Chinese Premier Zhu Rongji Zhu Rongji or Chu Jung-chi (born Oct. 23, 1928, Changsha, Hunan province, China) Premier of the State Council of China (1998–2003). In the 1950s he was denounced as a rightist, and he was purged again in the 1970s, but, once his Communist Party in 2001. The government wanted to make the project a model for other gas projects in terms of foreign investment. Foreign companies have been extremely cautious in investing in China's gas sector. This is because China lacks the necessary legal framework and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strategy for natural gas exploration and production. Natural gas E&P in China used to be of secondary importance compared with oil until a few years ago, when China found it was unable to bridge the gulf between energy supply and demand. Chinese energy companies, led by PetroChina, decided a few years ago to boost natural gas production to aid the country's economic growth. But they were not sure how the gas would be priced or where the markets would be. Despite the initial operation of the first section of the pipeline, PetroChina has not yet signed any take-or-pay contracts with power plants. PetroChina aims to increase the gas supply from the pipeline to eastern China to 5 BCM BCM Baylor College of Medicine BCM Become BCM Business Communications Manager (Nortel) BCM Broadcom Corporation BCM Business Continuity Management BCM Business Contact Manager (Microsoft) next year, far lower than the pipeline's designed capacity of 12 BCM/year, mostly to household and commercial users. China's demand for natural gas is expected to reach 200 BCM/year by 2020, but domestic production is only expected to total 120 BCM/year. Currently, China produces 34 BCM/year. But production will rise sharply starting from next year, following the expected startup of production at gas fields in western China and offshore gas fields. The government aims to increase natural gas use in China's total energy consumption mix to 10% by 2020 from the current 3%. In the first six months of this year, China produced 19.49 billion cubic meters Noun 1. cubic meter - a metric unit of volume or capacity equal to 1000 liters cubic metre, kiloliter, kilolitre metric capacity unit - a capacity unit defined in metric terms of natural gas, up 15.9% from the same period last year. Of the total, 14 billion cubic meters were produced by PetroChina. |
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