State-owned PetroChina has signed a purchase contract with Datang International Power Generation for natural gas supply into Beijing, PetroChina said Thursday.
Under the contract, Datang will supply 4 million cubic meters/day of natural gas produced from its coal-to-gas Keqi project in Inner Mongolia, northwestern China, from December, but no specific start date was given.
In a separate statement filed to the Shanghai Stock Exchange Wednesday, Datang said the contract will remain valid from December 10, 2013 to December 31, 2043. It will supply 1.2 Bcm/year of gas to PetroChina in the first phase, and then will increase it to 2.5 Bcm/year and finally to 4 Bcm/year. The time period for the three different phases were not given, and a Datang official contacted could not specify them either.
The price for the gas sold to PetroChina over December 13, 2013 to December 31, 2016 will be Yuan 2.75 (45 cents)/cu m , including the 13% of valued-added tax. The price will be negotiated again for supply from 2017, Datang said.
Datang will supply the gas from the Keqi project via pipeline to Miyun in Beijing. From Miyun the gas will be sent through PetroChina's 110 kilometer Gubeikou-Gaoliying pipeline to northern Beijing, said PetroChina.
Datang, one of China's largest independent utilities, has a 51% stake in the Keqi project, with gas company Beijing Gas Group (33%) and two other minority partners holding remaining 16%.
Datang is also developing the Fuxin coal-to-gas project in Liaoning province, since 2008. This project has the capacity to produce 4 Bcm/year of natural gas from coal.
China is sanctioning more coal-to-gas projects to boost gas supply. Most of the projects currently proposed are located in western Xinjiang province, which has ample coal reserves but is far from China's main demand centers.
