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Steel Pipe Joint Venture Gets up and Running

A Sino-Malaysian steel pipe joint venture was officially launched in Shanghai Sunday, aiming to cash in on China's emerging oil and gas pipe business and also tapping the overseas market.

The joint venture, Shanghai BSW Petropipe Co Ltd, will have an annual production capacity of 120,000 tons of spiral submerged-arc welded pipes, but this could increase as additional production lines come into operation.

Malaysian Prime Minister Abdullah Ahmad Badawi, currently on an official visit to China to mark the 30th anniversary of diplomatic relations between the two countries, was present at the ceremony.

The pipes are mainly used in the long-distance transportation of oil and gas and in urban gas networks.

Baoji Petroleum Steel Pipe Company, one of the largest pipe companies in China, holds 51 percent of the US$19-million joint venture. Malaysia UMW Ace (L) Ltd, a subsidiary of UMW Group, takes the remaining 49 percent.

Experts said the joint venture is very timely, as demands for pipes are increasing with imminent completion of the east-west natural gas pipeline.

Construction of the 4,000-kilometer pipeline, running from western China's Xinjiang Uygur Autonomous Region to the eastern coastal metropolis of Shanghai, the nation's first long-distance gas pipeline, is expected to completed by the end of this year.

In an effort to increase gas consumption, the central government is building dozens of subsidiary lines along the trunkline and constructing urban gas networks to establish a national gas network.

China's oil companies are also starting to build extensive oil pipelines to deliver crude oil from ports to refineries and carry oil products from refineries to the market. Transportation by pipe is much cheaper and safer than rail or road transportation.

It is estimated that annual steel pipe demand in the booming Yangtze Delta region will reach around 300,000 tons.

Based in Shanghai, the joint venture also wants to export its products.

Wang Tao, president of the China Petroleum Material & Equipment Corp - Baoji Petroleum Steel Pipe's parent firm - said yesterday that the company has received more than 20,000 tons of orders from both home and abroad, including an order for 15,000 tons from Sudan.

"We will expand exports as much as possible, tapping every possible market including Malaysia," said Wang.

When asked why the firm chose UMW as its partner, Wang said the joint venture hopes to take the advantage of the Malaysian company's strong business ties with Islamic countries.

(China Daily May 31, 2004)

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