Chinese pipeline begins pumping Turkmen gas

Jul 01, 2011 12:00 AM

China opened the trunk line of the world’s longest natural gas pipeline that links supergiant reserves in Turkmenistan with customers across southern China. But the pipeline operator is seeking to raise prices in China to stem losses from the project. The 5,400-mile pipeline will transmit as much as 1 tcf of Turkmen gas a year by June 2012 to lessen the energy-hungry giant’s reliance on coal.

This is China’s second west-to-east gas pipeline that sources Central Asia fuel. The first pipes 12 mm cm per year.
Now that China’s state-run energy company PetroChina has turned on pipeline spigots sales of Turkmen gas are projected to soar to 17 bn cm this year, an increase of nearly 400 % over 2010 levels. The imports will supply some 17 % of the amount China consumed in 2010.

Once completed, the $ 20.6 bn west-to-east gas pipeline project will have one trunk and eight branches. Three branches have been constructed so far, while the remaining five will be completed next year.
In the meantime, PetroChina has been lobbying the Beijing government to lift the prices of domestic gas, which are currently only half the amount the company pays for buying and carrying Turkmen fuel to customers.

China already raised its benchmark prices by 25 % in June 2010. But the company said that is not enough as it is losing almost $ 130 for each 1,000 cm of gas it sells.
PetroChina warned that it cannot bear such deep losses for too long.

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