State-owned China National Petroleum Corporation Friday said it has launched operations at the eastern section of the second west-to-east gas pipeline, enabling Central Asian gas to reach the country's southern province of Guangdong for the first time.
The second west-to-east pipeline, which has been deemed the world's longest gas pipeline, spans a total length of 8,704 km (5,396 miles) and has a gas transmission capacity of 30 billion cubic meters/year (2.9 Bcf/d). The pipeline comprises one main line and eight branch lines.
The pipeline will transport imported natural gas from Turkmenistan to South China's Pearl River Delta.
CNPC's listed arm, PetroChina, began construction on the $22 billion pipeline in February 2008.
The pipeline has been built in two sections--the western section and the eastern section.
The western section, which came on stream in late 2009, starts from Horgas in northwestern Xinjiang province to the Ningxia and Shaanxi provinces in northwestern China.
The newly operational eastern section is 4,978 km long and runs from Horgas in Xinjiang to Shanghai in East China and Guangzhou in South China.
The western section of the second west-east gas trunkline currently receives gas from Turkmenistan via the 1,833 km Central Asia-China cross-country pipeline system.
The pipeline complements the country's first 4,000 km west-to-east gas pipeline with 17 billion cu m/year capacity. The first pipeline began operating in 2004 and transports gas from Xinjiang to the eastern coastal Shanghai municipality.
Meanwhile, the National Development and Reform Commission, China's top economic planning body, is yet to set the price of natural gas imported from Turkmenistan.
In 2010, CNPC incurred a loss of Yuan 5 billion ($769.23 million) from selling imported gas via the second west-to-east pipeline at the same price as domestically produced gas, according to a Xinhua report.
The retail price in Beijing, which has been using the Central Asian gas since last year, is Yuan 2.2/cu m.
According to Xinhua, the cost of imported gas at Horgas is Yuan 1.20/cu m and the transmission cost through the second west-to-east pipeline is around Yuan 1.113/cu m.
The price of the imported gas into Guangzhou should be at least Yuan 3/cubic meter in order for CNPC and regional gas distribution companies to make a profit, an analyst at Shenzhen Gas told Platts Friday.
Industry analysts had been expecting Beijing to launch gas price reform between May and August this year, but rising inflationary concerns have prevented the government from doing so.
