Energy

New natural gas pipeline for Shanghai

By Wan Zhihong (China Daily)
Updated: 2010-09-01 12:56

A worker changes price tags at a gas station in Henan province. [Wang Qi / For China Daily]

Beijing - China's largest oil refiner Sinopec Group expects to achieve annual sales of 20 billion yuan ($2.94 billion) from the Sichuan-Shanghai natural gas pipeline project.

Huang Wensheng, Sinopec spokesman, told a press conference on Tuesday that under current average natural gas price of 1.51 yuan per cubic meters (cu m), the company is expected to achieve sales of 18 billion yuan from the project per year.

Related readings:  China expands natural gas network  Gas price hiked in some provinces  Sinopec prepares shale gas exploration  Plans to harness new natural gas resources

The 62.7-billion-yuan pipeline, which starts at Sinopec's Puguang natural gas field in Sichuan province and ends in Shanghai, started official operations on Tuesday.

The project is designed to transport 12 billion cu m of natural gas annually. The project can also make sulfur as a byproduct. Annual sales for sulfur are estimated at around 2 billion yuan, he added.

Besides adding sales to the company, Huang said that the project is more important in "helping China to ensure energy security and improve energy structure".

More use of natural gas, a clean energy, can help China to achieve its targets in energy and environment areas, he said.

Natural gas now accounts for around 3.9 percent of China's total energy consumption.

The country aims to use more gas to fuel its economy while reducing pollutions.

Compared with other fossil fuels like oil and coal, China's consumption of natural gas is projected to see rapid growth in the next few years, said analysts.

China consumed 60.6 billion cu m of natural gas in the first seven months of this year, up 21.2 percent from the same period of last year, according to the National Development and Reform Commission.

Cao Yaofeng, deputy general manager of Sinopec Group, said that the company will also accelerate its exploration and production of natural gas to meet increasing domestic demand.

The company has now formed five gas production bases, which are Sichuan, Ordos, southern Liaoning, Tarim Basin and Bohai Sea bay area, he said.

According to Sinopec, operation of the Sichuan-Shanghai pipeline can increase gas usage in the cities located along the project pipeline from 3.27 percent to 4.23 percent.

Operation of the project can also help reduce carbon dioxide (CO2) emissions by 16.97 million tons per year, as well as sulfur dioxide (SO2) and other pollutants by 798,200 tons per year.

The Sichuan-Shanghai gas pipeline is the third pipeline to send gas from China's western regions to the east.