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Oil,Gas Supply Line Built Along Silk Road

China is building an energy supply artery along the ancient Silk Road in a bid to transport oil and gas from northwest China's Xinjiang Uygur Autonomous Region and from the adjacent central Asian nations to the eastern and central parts of China.

There are bonanzas of oil and gas resources in nations along the ancient Silk Road, providing a wonderful opportunity for China to build an energy supply line.

China, which desperately needs energy to fuel its robust economic growth, has decided to use Xinjiang as a new energy production base.

As the second largest oil producer in the former Soviet Union, Kazakhstan boasts oil deposits of 54 billion barrels and verified natural gas reserves of 65-70 trillion cubic feet.

There are also abundant natural gas resources in Turkmenistan and Uzbekistan, with the former ranking fifth in the world in terms of gas reserves.

All the three are becoming important oil and gas suppliers to China.

Early this year, construction work started on a crude oil pipeline between Kazakhstan and China and on another pipeline for crude oil and oil products within the western regions of China. Plus the west-to-east gas pipeline that was completed at the end of last year, a "corridor" for oil and gas transportation has tended to take shape .

On August 22, Chen Geng, general manager of PetroChina, one of China's two leading onshore oil producers, announced in Dushanzi of Xinjiang that the China-Kazakhstan oil pipeline project will be completed at the end of this year.

The 3,040-km pipeline includes a 2,800-km-long section in Kazakhstan and a 240-km-long section in China, involving an investment of US$3 billion. It is predicted that by 2010, China will import 20 million tons of crude oil a year from the central Asian nation.

Construction began in March this year on the domestic oil pipeline, 4,000 km in length and so far the longest oil pipeline in China. It will run from Dushanzi of Xinjiang to Lanzhou, capital city of northwest China's Gansu Province, with an estimated investment of 14.6 billion yuan (US$1.8 billion). It is predicted that by 2006, Xinjiang will annually transport out 13.59 million tons of crude oil and 8.68 million tons of refined oil through the pipeline.

Xu Dingming, head of the Energy Bureau of the China Development and Reform Commission, said the west-to-east pipeline will help optimize China's energy structure. With a designed annual gas transport capacity of 12 billion cubic meters, the project will have the capacity increase to 17-18 billion cubic meters after it starts commercial operation.

Upon completion of all of the above-mentioned oil/gas pipelines, Xinjiang will be able to become a major oil and gas supplier for the rest of China.

The latest official resources evaluation shows that Xinjiang has estimated oil resources of 20.9 billion tons, or 30 percent of the nation's total onshore oil resources.

Last year, Xinjiang produced 22.28 million tons of crude oil, ranking third nationwide. It is predicted to outperform northeast China's Heilongjiang Province to become the nation's top oil producer, with a projected annual oil production of 50 million tons.

Zhou Xinyuan, deputy general manager of PetroChina's Tarim Oilfield, said that by the end of 2004, natural gas deposits of 664 billion cubic meters had been verified in the Tarim Basin of Xinjiang, which would ensure a stable annual gas supply of 30 billion cubic meters for the west-to-east gas transportation project for at least 20 years.

It is reported that the two leading onshore oil producers of China, PetroChina and Sinopec, are pouring huge money into prospecting of oil and gas resources in Xinjiang. The two oil giants spent 13.8 billion yuan (US$1.7 billion) for this purpose last year.

(Xinhua News Agency September 17, 2005)

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