Securing China's Energy Future

crobato

Colonel
VIP Professional
This issue may become far more important than Taiwan in the future and may dominantly shape China's social, governmental, technological and even military trends. Views, opinions, and articles on this matter can be posted in this thread.

Let's start with an article found by Hendrik 2000.


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China builds plant to turn coal into barrels of oil

By Nao Nakanishi and Niu Shuping Tue Jun 3, 8:25 PM ET

ERDOS, China (Reuters) - With oil prices at historic highs, China is moving full steam ahead with a controversial process to turn its vast coal reserves into barrels of oil.
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Known as coal-to-liquid (CTL), the process is reviled by environmentalists who say it causes excessive greenhouse gases.

Yet the possibility of obtaining oil from coal and being fuel self-sufficient is enticing to coal-rich countries seeking to secure their energy supply in an age of increased debate about how long the world's oil reserves can continue to meet demand.

The United States, Australia and India are among those countries looking at CTL technology but are constrained by environmental concerns associated with the process which releases excessive amounts of carbon gases into the atmosphere and consumes huge amounts of water.

But China, which lacks the powerful environmental lobbyists that might stymie any widescale initiative elsewhere, is building a major complex on the grasslands of Inner Mongolia.

"Those countries with large coal reserves, like South Africa, China or the United States, are very keen on CTL as it helps ensure energy security," said Yuichiro Shimura at Mitsubishi Research Institute Inc (MRI) in Tokyo.

"However, the problem is that it creates a lot of carbon dioxide. Also you need a huge amount of energy for liquefaction, which means you end up wasting quite a lot of energy," the chief consultant at MRI in charge of energy told Reuters.

In Erdos, Inner Mongolia, about 10,000 workers are putting the final touches to a CTL plant that will be run by state-owned Shenhua Group, China's biggest coal mine.

The plant will be the biggest outside of South Africa, which adopted CTL technology due to international embargoes on fuel during the apartheid years.

"We cannot fail," Zhang Jiming, deputy general manager at Shenhua Coal Liquefaction, told Reuters. "If things go smoothly, we will start with the expansion next year," he said.

The plant will start operating later this year and is expected to convert 3.5 million tonnes of coal per year into 1 million tonnes of oil products such as diesel for cars.

That's the equivalent of about 20,000 barrels a day, a tiny percentage of China's oil needs as oil consumption in China is around 7.2 million barrels a day.

If all goes well, then Inner Mongolia will push on with an ambitious plan to turn half of its coal output into liquid fuel or chemicals by 2010. This would be around 135 million tonnes, or about 40 percent of Australia's annual coal output.

The region, as big as France, Germany and England put together, hopes CTL will propel development while contributing to Beijing's plan to have CTL capacity of 50 million tonnes by 2020.

That would be about 286,000 barrels a day, or about four percent of China's energy needs based on current consumption.

UNITED STATES LOOKS AT CTL

CTL is also being considered by a number of coal-rich countries such as the United States, which has the world's largest coal reserves.

The relatively low cost of CTL produced oil given current oil prices, plus the chance to be more energy self-sufficient is a powerful incentive.

The technology is being seen in some quarters as offering an opportunity for the U.S. to reduce its dependency on other countries for oil and a small U.S. CTL industry is emerging.

DRKW Advanced Fuels plans to start construction on a plant in Wyoming next year in partnership with Arch Coal Inc and with technologies licensed by General Electric and Exxon Mobil. The defense department is experimenting with CTL in an effort to cut reliance on fuel from countries unfriendly to the United States.

But CTL is highly controversial. Experts say the whole lifecycle releases about twice as much carbon dioxide, the most common greenhouse gas, as fossil fuel. Liquefying coal also requires large amounts of energy and drains water supplies.

The fuel produced through this method has a shelf life of up to 15 years, unlike other motor fuels which is attractive to the military and to governments keen to ensure fuel security.

Though CTL technology was developed about 100 years ago, it has been little used, except in Nazi Germany and apartheid South Africa, which had difficulty accessing then-inexpensive oil.

Oil prices, which have more than quadrupled this decade to above $130 a barrel, have reignited interest in CTL.

The Oil and Gas Journal in April suggested it costs $67 to $82 a barrel to produce CTL fuel, based on the experiences of South Africa's Sansol. Exact prices would depend on a range of factors including coal and water prices and of course it is very expensive to build CTL plants.

Shenhua will be the first to use direct CTL technology on a large scale. It is different from indirect CTL, proven in Nazi Germany and by South Africa's Sasol, and converts coal directly into liquid fuel, skipping gasifying coal into syngas.

"CTL happened only twice in world history, and both times it's been in nations facing some kind of state of emergency with respect to energy. It should sound an alarm bell," said Gary Kendall, from the WWF conservation group.

"There are two defining issues in the 21st century: one is carbon dioxide and one is water ... And the (CTL) process is horrifically carbon intensive. It is also very water intensive."

The "holy grail" for CTL enthusiasts is to find a way to turn coal into liquid without releasing carbons into the air. The idea is that the carbon dioxide, the main global warming gas, would be captured and stored deep under ground.

Carbon capture and storage, which is still the subject of much research, would alleviate the environmental impact of carbon dioxide being released into the environment, the main argument against CTL by critics. This could spur CTL development in the United States and other western countries.

Coal lobbyists in the U.S. have been clamoring for more research into CTL but they have failed to override environmental concerns due to the carbon emissions of the process. Pro-CTL amendments were dropped from the 2007 U.S. energy bill.

"If there is no good solution for CO2, the (CTL) industry will not flourish," Chen Linming, executive vice president at Sasol China, told a conference last month, urging the government to support carbon capture and storage technology.

Shenhua and Sasol are conducting a feasibility study to build two more CTL plants in the provinces of Shaanxi and Ningxia.

WATER, ELECTRICITY

Whether CTL technology could ever be used on a large-scale will depend on how coal companies deal with the massive amount of water used in the process.

China faces serious water shortages and the Gobi desert, which spans across Inner Mongolia, is expanding rapidly. There are drinking water shortages in northwest China and ground water levels are sinking every year.

Shenhua plans to use ground water and recycled water from coal mines to supply the 8 million tonnes it will need a year.

Yet Zhang said it would need to tap other sources, such as the Yellow River, in the second phase. He would not disclose how much the company spent to build the complex, or how much carbon dioxide it is expected to emit.

"There's no doubt with oil at over $100 a barrel, CTL is very economic ... However the constraint is the availability of water," said Michael Komesarroff from Urandaline Investments.

"The Yellow River often dries up ... In some parts of China, 30 years ago, the water table was 5 meters below the ground. Today it is 35-40 meters below the ground because they take the ground water in an unsustainable way."

Environmentalists say that rather than invest in a process that will probably never be environmentally sound, China and other countries should move towards running cars on batteries rather than liquid fuel.

"If China's primary concern is energy security, then I think you would want to take the most efficient way of using the resources," said WWF's Kendall.

"If you turn coal into electricity at high efficiency, and charge electric vehicles, you can get three times as many kilometers per unit of coal."
 

montyp165

Junior Member
Coal gasification technology has been way overdue, about time more investment be made in it. Excess Carbon emissions can be used to feed algae tanks for biofuels at the same time.
 

Schumacher

Senior Member
Two latest stories here with significance not only with regard to new energy sources but also how they'll help to alleviate the choke points issue of Middle East oil to China, ie a pipeline each from Central Asia & Myanmar.
If/when the plan of a Pakistan pipeline for ME oil to go to China becomes viable, the energy security issue will be further reduced.

Turkmenistan to export gas to China in 2009 - Berdymukhammedov

27.06.2008, 13.49


ASHGABAT, June 27 (Itar-Tass) - In 2009 Turkmenistan will be exporting natural gas from the right bank of the Amu Darya River through Uzbekistan and Kazakhstan to China, Turkmen President Gurbanguly Berdymukhammedov said making a welcoming address to the participants in the construction of a gas treatment facility at the Samandepe field that has been launched.

It is located on the right bank of Amu Darya and is part of the Bagtyyarlyk agreement territory according to the production sharing agreement with the Chinese National Oil and Gas Company. The future gas pipeline will run from this place.

“Diversification of the transportation of energy carriers to world markets is a priority sphere in the fulfilment of the country’s resource potential,” the president noted in his address. “According to independent foreign experts, our gas reserves are 24.6 trillion cubic metres,” the head of Turkmenistan stressed.

The cost of the Turkmenistan-China gas pipeline with a total length of 1,818 kilometres will exceed 6.7 billion US dollars, according to the state agency for management and use of hydrocarbon resources under the Turkmen president.

Over 500 million dollars have already been attracted for projects aimed at the development of the Bagtyyarlyk agreement territory. Complex work to prepare wells is currently underway. It is planned to build at the Samandepe gas field facilities for gas storage and treatment, as well as the compressor and measuring stations. In accordance with the general agreement on the construction of the Turkmenistan-China gas pipeline, the annual deliveries of natural gas will reach 30 billion cubic metres.

##########

Daewoo consortium signs gas supply deal with China
Mon Jun 23, 2008 1:14am BST

SEOUL, June 23 (Reuters) - South Korea's Daewoo International (047050.KS: Quote, Profile, Research) said on Monday its Myanmar gas consortium had agreed to sell natural gas to China National Petroleum Corp.

Daewoo, which operates Myanmar's A-1 and A-3 natural gas fields, said in a regulatory filing its consortium had signed a memorandum of understanding with CNPC on Friday over the sale and transportation of natural gas from the project.

Daewoo has a 51 percent stake in the fields, followed by India's Oil and Natural Gas Corp (ONGC.BO: Quote, Profile, Research) with 17 percent, India's GAIL (GAIL.BO: Quote, Profile, Research) with 8.5 percent and South Korea's Korea Gas Corp (036460.KS: Quote, Profile, Research) with a 8.5 percent and Myanmar Oil & Gas Enterprise with a 15 percent.

CNPC is the state-owned parent of listed PetroChina 0857.KS.

The deal comes after China surprised markets last week by raising its nationwide fuel prices by up to 18 percent in its biggest one-off hike. [ID:nL1914615]

Few western companies will invest in the former Burma because of its poor human rights record and continued detention of Nobel Peace Prize laureate Aung San Suu Kyi, which has led to a broad range of U.S. and European sanctions.

China, typically wary of supporting or imposing sanctions and one of Myanmar's few diplomatic allies, has shown no qualms about investing in its neighbour, eager for its natural gas, oil, minerals and timber to feed a booming economy.

Daewoo said last year it had picked China as a preferred bidder for natural gas from a project in Myanmar, putting it at the front of a queue that also includes India and Thailand.

Myanmar officials have also said the gas will go to China and Beijing says it is considering building gas and oil pipelines into southwestern Yunnan province. This would improve access to its neighbour's rich resources, eyed by many energy-hungry nations across Asia.

Myanmar has at least 90 trillion cubic feet of gas reserves and 3.2 billion barrels of recoverable crude oil reserves in 19 onshore and three major offshore fields.

Altogether, 25 offshore blocks are under exploration, 12 of them in the Gulf of Martaban, six off the Tanintharyi coast and seven off the Rakhine coast.

CNPC controls listed PetroChina, which has come under pressure from activist shareholders because of its parent firm's investments in Sudan.

The supply of gas from the project will be adjusted every quarter based on international energy prices, Daewoo said. (Reporting by Miyoung Kim; Editing by Keiron Henderson)
 

ccL1

New Member
That last article talking about the oil and gas pipeline from the Indian Ocean, through Myanmar (from the port of Kyaukphyu), to China's Yunnan Province is a very underrated issue.

Although building those pipelines are already underway and may take a few years, they very low-risk/high-reward pipelines to build. If they can be expanded enough in the future, they can help China limit its oil import trip from Africa and the Middle East by two weeks (supposedly?) and allows oil tankers to avoid the Strait of Malacca.

I don't know if a pipeline through Pakistan is secure enough. The Pakistani military has trouble safe-guarding lots of those frontier areas. Those areas are essentially sovereign. Building pipelines through those areas might be a huge risk (more so than Myanmar).
 

AssassinsMace

Lieutenant General
The big nuke companies of the world salivated when China announced its plan to buy 40 nuclear reactors. China just notified Westinghouse that it wants 100 of their reactors by 2020.


China wants 100 Westinghouse reactors
By Bonnie Pfister
TRIBUNE-REVIEW
Saturday, June 28, 2008

China wants to have 100 of Westinghouse Electric Co.'s nuclear reactors in operation or under construction by 2020 -- more than double what was anticipated, according to the company's incoming CEO.

Aris Candris, who will lead the Monroeville-based firm beginning Tuesday, said Chinese officials shared those plans with Westinghouse during a mid-May meeting.

"It is huge," Candris said in an interview Thursday with the Tribune-Review. "Originally we were thinking somewhere around 40."

"This is the beginning of the nuclear renaissance," he said. "Growth is good, but it's also a management challenge."

He succeeds Steve Tritch, who is retiring after 37 years with the company, the past six as CEO. Tritch remains chairman of the board of Westinghouse, a global leader in reactor engineering, construction and maintenance. Westinghouse's technology is the basis for nearly half of the world's 440 nuclear power plants, including 62 of the 104 in the United States.

Candris, 57, who joined the company in 1975 and most recently ran the fuel business, takes over as the industry enjoys renewed support and federal subsidies meant to promote a cleaner alternative to coal-burning plants.

Its AP1000 reactor, which can generate enough power to electrify 700,000 homes, is the technology of choice for half of the 30 reactors planned for the United States. This spring Westinghouse signed deals for four domestic reactors, the first such contracts to be signed in this country in 30 years.

Last year the company beat out French rival Areva to win a $5.3 billion contract to build four AP1000s in China. Although Westinghouse will transfer the technology to Chinese licensees over the next few years, Candris said, it will build several additional plants with partner The Shaw Group, of Baton Rouge, La.

Westinghouse books higher revenue from plants it actually builds, but the licensing strategy frees the company to pursue research and development.

"There are a number of entities over the years that we have licensed -- Areva, Mitsubishi in Japan, Doosan in Korea. In all cases, those became long-term relationships, with long-term benefits for both," Candris said.

Design will begin this year on a 1,700-megawatt reactor, he said, that could be targeted to energy-hungry China and eventually India.

Plans for domestic reactor construction are moving briskly. Candris said contracts for two AP1000s each at three Southeastern U.S. utilities will be signed in the next nine months; the first deal is likely by summer's end. He said he was not worried that soaring costs of steel, copper and cement would hurt his industry, because those costs equally affect construction of other kinds of power plants.

Growth has prompted Westinghouse to hire nearly 3,000 people worldwide over the past three years, he said, and the Monroeville office is at capacity. About 350 instrumentation and control staffers last month moved to rented space in Cranberry, adjacent to a Westinghouse headquarters under construction. The 2,000 or so Monroeville staffers are to relocate next June.
 

Schumacher

Senior Member
.........
I don't know if a pipeline through Pakistan is secure enough. The Pakistani military has trouble safe-guarding lots of those frontier areas. Those areas are essentially sovereign. Building pipelines through those areas might be a huge risk (more so than Myanmar).

Yup, that's why I put a big IF on the Pakistani pipeline. Securing it would be a headache but IF they ever get it to work, ME oil/gas will almost flow directly into Western China.
 

crobato

Colonel
VIP Professional
A post stating China's first coal fed, synthetic fuel plant will start trial production in September.


中国神华集团位于内蒙古鄂尔多斯的直接液化煤制油项目将在三个月后的9月份投入试生产,这一投资100亿元的大型煤制油项目,目前进入了调试阶段。由于国际油价在高位运行,这给煤制油项目带来了较大的利润空间。世界论坛网
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  盈亏平衡点为50美元/桶世界论坛网
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  现在国际认可的煤制油技术分为两类,直接液化和间接液化。在我国直接液化项目只有神华集团一家在进行,间接液化技术则有南非沙索与神华集团合作的项目,以及内蒙古伊泰、兖矿集团进行的小规模煤制油项目。世界论坛网
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  神华煤制油项目是国家重点建设项目之一,于2004年8月开工建设,项目设计年产油品500万吨。神华煤制油项目负责人此前曾向《第一财经日报》表示,等该项目成熟后,还可能会注入到上市公司中国神华(601088.SH)里。世界论坛网
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  但相比间接液化,直接液化的能耗比却要低很多。世界论坛网
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  平安证券研究员陈亮表示,以目前的工艺可以看出,每产一吨成品油,直接液化消耗原煤是3~4吨,而间接液化则消耗4.5~5.5吨;每吨油品产出中,直接液化耗水量为5~6吨,间接液化项目的耗水量则是8~12吨。从单位投资金额计算,前者的每万吨产能是0.8亿~1.1亿元,而间接液化则是1.1亿 ~1.3亿元。世界论坛网
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  “投资比较大是事实,但需要将时间放得更长远来看。”陈亮指出,以目前已量产的南非沙索公司为例,其2006年预计煤制油的盈亏平衡点,与国际原油价格45美元/桶相若。世界论坛网
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  由于全球性的通货膨胀影响,预计煤制油的盈亏平衡点上升到50美元,“神华集团的这个直接液化项目,其煤炭本身的成本是比较低的,因为由神华直接供应货源,更高的成本体现在固定资产投资上。”世界论坛网
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  煤制油项目仍有两道“门槛”世界论坛网
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  根据《煤炭工业发展十一五规划》(下称《规划》),国家倡导我国积极开展气化液化等用煤的资源评价,做好煤化工基地规划,调控煤化工建设规模。世界论坛网
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  《规划》指出,“十一五”期间,要完成煤炭液化、煤制烯烃的工业化示范,示范工程包括:采用国内开发的工艺和高效催化剂技术,建成100万吨/年煤炭直接液化示范工程,完成具有自主知识产权的煤直接液化工艺的工业化示范;引进国外成熟技术,建设300万吨/年的间接液化工厂,并完成商业化运行示范;采用不同的自主知识产权技术,分别完成16万吨/年和100万吨/年间接液化示范装置和示范工程;采用自主知识产权技术,完成60万吨/年煤制烯烃示范工程。世界论坛网
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  不过,虽然目前原油价格高昂且不能很快回落,煤制油项目有一定的利润空间,但仍有两道“门槛”需要迈过。世界论坛网
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  首先,我国成品油价格还未与国际市场接轨。如果一旦煤制油投产,走零售渠道的话,销售价格将会受到限制,这会减少煤制油企业的利润,同时可能会使得正在研发这一新技术的动力趋缓。世界论坛网
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  其次,煤制油技术仍然处于摸索阶段。神华集团这一套100万吨/年的项目,完全依靠自主研发。而神华集团位于宁夏、陕西的两个间接煤制油项目估计要在 2015年到2016年才可能运营,其他煤制油业务最快也要在2到3年后建成,因此不可能很快成为一个替代传统炼油业务的新能源项目。


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Hendrik_2000

Lieutenant General
To secure it energy requirement what is better than building a pipe line to Yunan from Myanmar

China signs natural gas deal with Myanmar 01 July 2008
Straits Times
(c) 2008 Singapore Press Holdings Limited
Print this page
Pact boosts Beijing's energy security and may speed up plans for pipeline linking the two countries

IN BEIJING - CHINA has signed a new deal to buy and pipe natural gas from neighbouring Myanmar to southern Yunnan province, a move that could boost plans for an ambitious oil pipeline along the same route.

An oil pipeline linking Myanmar's western coast with Yunnan in China has been talked about for years as a possible solution to the country's 'Malacca Predicament'. This is a reference to the mainland's overwhelming reliance on the Strait of Malacca as the main transit route for oil imports to feed its booming economy.

About 80 per cent of the crude oil that China imports from the Middle East and Africa has to sail through the Strait of Malacca and up through the South China Sea before reaching the mainland's eastern coast.

This has prompted fears in Beijing that the busy strait could become a potential choke point where China's rivals could shut down its access to oil and raw materials in the event of a conflict.

The proposed Myanmar- Yunnan oil pipeline will ease this problem, at least on paper, by allowing tankers to unload their cargoes on the western coast of Myanmar before the oil is piped to the mainland
.

This would boost China's energy security, and potentially cut costs and shipping times.

But the prohibitive cost, as well as the political uncertainties involved in such a project, could still emerge as stumbling blocks, observers say.

Politics likely played a huge part in China's decision not to highlight the natural gas deal. It announced it in the state media only 10 days after it was signed in Myanmar's capital, Naypyidaw.

Myanmar's military junta has come under severe international criticism for its crackdown on anti-government protests last year, as well as its sluggish response to the recent cyclone which killed tens of thousands of people.

The lucrative natural gas deal, however, would bolster the generals' ability to continue resisting threats of international sanctions over their rule.

According to a recently released Myanmar government report, foreign investment in the country's oil and gas sectors more than tripled last year to US$474.3 million (S$645 million).

That figure accounted for 90 per cent of all foreign investment in Myanmar last year of US$504.8 million.

China's success in clinching the pact also likely came at the expense of India, which is competing for influence in Myanmar and also reportedly in hot pursuit of this natural gas deal.

Chinese state media reports gave no details of the politically sensitive deal, such as its value or commencement date. It merely said that it involved the A-1 and A-3 offshore natural gas blocks in Myanmar.

According to Reuters, South Korea's Daewoo International Corp has a 51 per cent stake in the fields, followed by India's Oil and Natural Gas Corp with 17 per cent, India's GAIL with 8.5 per cent, South Korea's Korea Gas Corp with 8.5 per cent and Myanmar Oil & Gas Enterprise with 15 per cent.

Under the deal, signed on June 20, the mainland's China National Petroleum Corp will work with these five partners for the 'sale and transportation' of the Myanmar natural gas.

'This signalled the full launch of China and Myanmar's collaboration in natural gas,' the official Xinhua news agency said yesterday.

'This is also an important part of the cross-border energy network that has been in the works for years.'

News of the natural gas deal came in the same month that saw Beijing raise fuel prices by 18 per cent - its highest one-time increase ever.

Yesterday, China's top economic planning agency, the National Reform and Development Commission, ordered a freeze on major public transport fares in a bid to curb a 'chain reaction' that would lead to higher inflation.

But with crude oil prices hitting fresh highs in international markets, a rise in transportation costs seems inevitable in China, despite government price controls.

Meanwhile, Chinese airlines yesterday received the green light to raise domestic fuel surcharges by up to 50 per cent.

[email protected]
 

Schumacher

Senior Member
Related to the Turkmen deal few days ago, the Uzbek section of the pipeline to China begins construction.

02.07.08 13:30
Uzbekistan Launches Construction of Gas Pipeline to China

Uzbekistan, Tashkent, 2 July / corr. Trend Capital T.Zhukov / The construction of the Uzbekistan-China gas pipeline began in Bokharan region. The first weld attachment of a gas pipeline was implemented in the frontier region with Turkmenistan, the Uzbekneftegaz National Holding Company (NHC) told Trend Capital. The project is being realized within the framework of intergovernmental agreement on principles of the construction and exploitation of the Uzbekistan-China gas pipeline, with the length of 525km.

The Uzbek and Chinese Asia Trans Gas Joint Venture (JV) Limited Company (Ltd) was appointed a customer and financing company to realize this project at the loan. The JV was committed in designing, construction and further exploitation of this gas pipeline. The Uzbekneftegas NHC and the China National Petroleum Corporation (CNPC) are the founders of the joint venture each holding equal share (50%). The lump cost of the project amounts to $2.1bln.

The company said that the project envisaged the construction of two lines. The first line of a gas pipeline will be put into exploitation in December 2009, the second in 2011 at the special governmental decree issued by Islam Karimov, the Uzbek President.

It is planned to construct three gas-compressor stations, measuring units, camps and other infrastructure facilities in the direction of main gas pipeline to be built in the territory of Kashkadarinski, Bokharan, and Navoiyski regions.

Ergash Shoismatov, the Uzbek Premier Minister, the Deputy Chairman of the State Committee on Development and Reforms of China, Chjan Gobao, the chairman of the State Bureau on energy supply, and Lyao Yunyuan, the vice-president of the China National Petroleum Corporation (CNPC), participated in the opening ceremony of beginning of the construction.

The correspondent can be contacted at: [email protected]
 

ccL1

New Member
If anyone is interested in the proposed (and probably building has already begun) pipelines from Myanmar's coast to China's interior, here are some maps from previous articles that I've been reading since last year:

news-graphics-2008-_438467a.gif


CAS996.gif


Compare the distance between the Myanmar-China gas/oil pipeline to having tankers actually hauling this stuff around through the Indian Ocean, through the Strait of Malacca, and through the South China sea before reaching Chinese waters.

The Chinese government is taking it slow, by proposing only a single pipeline or two for now, but if Myanmar can be stabilized politically and China expands to a few pipelines, I wouldn't be surprised if China can almost ween itself off of having to go the circuitous naval route.
 
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