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West-east Gas Pipeline Project to Benefit Xinjiang, Deputy Says
The west-east gas pipeline will turn the energy advantages of western regions into potential economic gains, said Mahmut Muhammat, a deputy from Xinjiang Uygur Autonomous Region to the Ninth National People's Congress, China's top legislature. In an exclusive interview with china.org.cn, Muhammat said he sees the gas pipeline project as a significant component of the strategy of developing west China.

Mahmut Muhammat said the project also has great strategic importance in maintaining political and social stability of Xinjiang: With the major gas field located in Xinjiang Tarim Basin, the pipeline project will promote the exploitation of natural gas and accelerate the economic development of Xinjiang as well as other western regions, bringing benefits to various ethnic groups of Xinjiang.

The total investment in the tapping of gas fields upstream as well as the investment in the laying of 1000-kilometer (621-mile) pipelines will play a significant role in boosting the economic development of Xinjiang, Muhammat said. After the completion of the project, the government of Xinjiang will gain remarkable tax revenues from the operation of both the pipelines and the exploitation of the gas fields. Furthermore, some preferential policies will be given to Xinjiang so as to reflect the state's support and concern for the development of Xinjiang.

Mahmut Muhammat said he thinks that the west-east gas pipeline project is in line with the state policy of expanding the domestic market and that it will be conducive to the growth of the national economy. The exploitation of gas fields upstream, the pipeline construction in the middle section and the utilization of natural gas downstream require a total investment of over 140 billion yuan (US$17 billion) and 2 million tons of steel. It accordingly will help such industries as metallurgy, machinery, electric power, building materials as well as equipment manufacturing and other related industries to upgrade their technology and products, and create more job opportunities.

The west-east gas pipeline project also plays an important role in preventing and controlling air pollution. At present, air pollution in China is very serious due to its large consumption of coal as fuel. Sulphur dioxide emissions in China rank first in the world, and carbon dioxide emissions rank second in the world, second to the United States. Natural gas is a clean energy. Using it as fuel will reduce sulphur dioxide emissions and dust by almost 10 percent and carbon dioxide emissions by nearly 60 percent.

A series of large and middle-sized gas fields including the Kela-2 gas field have been found in the Kuche area, north of Xinjiang Tarim Basin, which is the major gas supplying field of the west-east gas pipeline project. By far, the proven natural gas reserves in Tarim Basin are 526.7 billion cubic meters. In addition, with the newly found gas fields including Dina-2 gas field, Xinjiang is capable of supplying 12 billion cubic meters of gas annually for 20 years.

According to Mahmut Muhammat, because of the huge investment opportunities in the west-east gas pipeline project, beginning with the year 2000 Xinjiang began to attract investment from overseas. As of now, four foreign investors have signed cooperative memoranda of understanding with Xinjiang on exploitation of gas fields, construction of pipelines and marketing products.

According to a preliminary estimate, the whole west-east gas pipeline project will require a total investment of 216 billion yuan (US$26 billion). Whether such tremendous investment can be recouped is of concern to people from all walks of life. Based on the calculations by the State Development Planning

Commission, the average investment in the pipeline per kilometer amounts to 10.58 million yuan (US$1.28 million). The cost is roughly equal to the same kind of long-distance pipeline construction in foreign countries in recent years, and it is within a reasonable range. The after-tax financial profit rate made from the pipeline project is 12 percent. The payback period on the investment is about 10 years.

With China's entry into the World Trade Organization (WTO), what impact will imported liquefied natural gas have on the prices of natural gas supplied by the west-east gas pipeline project? Mahmut Muhammat answered this question with great confidence: China earlier made a detailed and thorough investigation on this matter. The investigation shows the natural gas supplied by the west-east gas pipeline project will have a price advantage acceptable to consumers over that of imported liquefied natural gas. In light of prices of imported liquefied natural gas from Japan, the average price of the natural gas piped from the west to various cities will be 20 percent lower than the gas prices of Japan. Take the Yangtze River Delta for example, the average prices accepted by local people is higher than the average prices of natural gas supplied from the west-east gas pipeline project. Therefore, natural gas supplied from the west will have a thriving consumer market, now and in the future.

Mahmut Muhammat concluded with the observation that when the west-east gas pipeline project is completed in the year 2005, as expected, Xinjiang residents will enjoy an increase in their income while Shanghai residents will have access to affordable and clean new fuel.

(By Zhang Xiaochong, china.org.cn staff reporter, translated by Wang Qian, March 29, 2002)

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