Oil And Gas Pipelines In China
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  • China continues to invest in natural gas pipeline infrastructure to link production areas in the western and nothern regions of the country with demand centers along the coast and to accommodate greater imports from Central Asia and Southeast Asia.
  • China had nearly 32,000 miles of main natural gas pipelines at the end of 2012. China's natural gas pipeline network is fragmented, although NOCs are rapidly investing in the expansion of the transmission system to connect more supplies to demand centers along the coast and in the southern regions as well as integrating local gas distribution networks. While the major NOCs operate the trunk pipelines, local transmission networks are operated by various local distribution companies throughout China.
  • CNPC is the key operator of the main gas pipelines, including the West East Gas Pipeline, and holds over three-fourths of the gas transmission in China. CNPC moved into the downstream gas sector recently through investments in gas retail projects as well as investments in several pipeline projects to facilitate transportation for its growing gas supply. CNPC developed three parallel pipelines, the Shan-Jing pipelines, linking the major Ordos basin in the North with Beijing and surrounding areas.
  • The third Shaan-Jing Gas Pipeline began operations in 2011. The NOC fully completed its Zhongwei to Guiyang Gas pipeline, which delivers gas from the West-to-East pipeline network in the north-central part of the country to the gas markets in southwestern China, in 2013. Sinopec is also a major player in the downstream transmission sector, operating pipelines in the Sichuan province.

West-to-East Gas Pipeline

  • The Chinese government promoted the construction of the West-to-East Gas Pipeline in 2002 to meet natural gas demand in the eastern and southern regions of the country with production from the western provinces and Central Asian countries. CNPC's first West-to East Gas Pipeline, commissioned in 2004, is China's longest natural gas pipeline at 2,500 miles. The pipeline links major natural gas supply bases in western China (Tarim, Qaidam, and Ordos Basins) with markets in the eastern part of the country and ends in Shanghai. The initial West-to-East pipeline has an annual capacity of 420 Bcf/y and contains many regional spurs along the main route, which has improved the interconnectivity of China's natural gas transport network.
  • CNPC designed the second West-to-East trunk pipeline to connect with the Central Asian Gas Pipeline at the border with Kazakhstan and completed construction of this line in 2011. The second West-to-East pipeline has a capacity of 1.1 Tcf/y and spans over 5,200 miles, including the trunkline and eight main branch lines. This pipeline transports natural gas from Central Asia and western China to the key demand centers in the southeastern provinces. The western section of the line, running parallel to the first West-to-East Pipeline to Zhongwei in north-central China, became operational at the end of 2009. The eastern section, which began operating in late 2011, runs from Zhongwei to southern Guangdong province and Shanghai in the East.
  • To accommodate greater gas flows from Central Asia, CNPC began constructing the third West-to-East pipeline, set to become operational by 2015. This third pipeline will run partially parallel to the second West-to-East pipeline and end in the southeastern provinces of Fujian and Guangzhou. CNPC anticipates that the 1.1-Tcf/y pipeline will transport natural gas from Central Asia and domestically produced gas from the Xinjiang Province. Proposals for the fourth and fifth West-to-East pipelines are still in the planning stages, but China anticipates a capacity of nearly 1.6 Tcf/y for each line.

International pipelines

  • Over the past three years, China has ramped up imports of natural gas via pipelines as production from Central Asia and Myanmar increased and as gas infrastructure in the region improved. China's first international natural gas pipeline connection, the Central Asian Gas Pipeline (CAGP), transports natural gas through twin parallel pipelines from Turkmenistan, Uzbekistan, and Kazakhstan to the border in western China. The CAGP's current capacity is 1.1 Tcf/y and spans 1,130 miles. The pipeline's first and second phases (Lines A and B) began operations in 2010 and link to the second West-East pipeline at the Sino-Kazak border.
  • CNPC has invested in upstream stakes in Turkmenistan to facilitate the gas supply development. The NOC operates the Bagtyyarlyk PSC that currently feeds the CAGP. In 2009, CNPC was awarded a production supply agreement to develop natural gas resources at Turkmenistan's massive Galkynysh gas field and signed a deal with Turkmengaz, the state-owned gas company. China imported over 2 Bcf/d (765 Bcf/y) from Turkmenistan and Uzbekistan in 2012 and expects to increase imports as the pipeline capacities on both sides of the border expand. Turkmenistan and China signed another gas supply agreement in 2013 to extend supplies from 1.4 Tcf/y to 2.3 Tcf/y by 2020 as the new Galkynysh field ramps up production following its start of operations in September 2013.
  • The CAGP is undergoing expansion as more supply agreements are signed and as gas production capacity becomes available from Turkmenistan, Uzbekistan, and Kazakhstan. In 2010, CNPC signed an agreement with Uzbekistan to deliver 350 Bcf/y (1 Bcf/d) through a transmission line that connects with the CAGP. Uzbekistan began exporting natural gas to China in mid-2012 and quickly ramped up to around 400 MMcf/d by mid-2013. Kazakhstan and China also signed a joint venture agreement in 2010 to construct a pipeline starting in western Kazakhstan and connecting with the CAGP lines. The pipeline (known as Line C), the third phase of the CAGP, is expected to add another 880 Bcf/y of capacity from the three Central Asian countries to the CAGP and begin operations in 2014. This line corresponds with the commencement of the third West-to-East pipeline on the Chinese side. The second phase of the pipeline from Kazakhstan links the country's western fields to Line C of the CAGP and is scheduled to come online in 2015. CNPC signed another agreement with Uzbekneftegaz (the Uzbek NOC) in September 2013 to build a fourth line of the CAGP (Line D) that would supply natural gas from the second stage of the Galkynysh field development and traverse Turkmenistan, Uzbekistan, Tajikistan, and Kyrgyzstan. This pipeline is anticipated to come online in 2016 and increase the capacity by another 880 Bcf/y.
  • The China-Myanmar gas pipeline is likely to boost gas imports to China and diversify its supply in the future. CNPC signed a deal with Myanmar in 2008 to finance the construction of a 1,123-mile, 420-Bcf/y pipeline from two of Myanmar's offshore blocks to China's Yunnan and Guangxi provinces in the southwestern region. Initial production from the fields is 182 Bcf/y, with China expected to receive 146 Bcf/y. China began importing gas from Myanmar when the pipeline became operational in September 2013. The pipeline is projected to ramp up to full capacity as adjacent gas fields in Myanmar are developed.
  • CNPC and Gazprom signed a Memorandum of Understanding in 2006 for gas pipeline imports from Russia to China. However, negotiations have stalled over setting an import price and determining the supply route from western or eastern Russia. In September 2013, CNPC officials signed a framework agreement with Gazprom to purchase 1.3 Tcf/y of gas from the proposed East Siberian pipeline, which is expected to connect Russia's Far East and Sakhalin Island to northeastern China. The countries are still negotiating a price for the gas.

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