Puguang To Jinan Sinopec Pipeline Was Ordered To Be Diverted

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					Shanghai's natural gas demand is expected to grow rapidly, crane photo Shanghai
natural gas terminal pipeline data for the end station war reporter Yan Li

Reporter yesterday from China Petroleum & Chemical Corporation ("Sinopec")
learned that the company "on the construction of natural gas from Sichuan Province to
Jinan in the pipeline Puguang application" rejected by State Development and Reform
Commission, the NDRC hopes to build one of its access to Jiangsu and Zhejiang
Provinces pipes, and other two gas giants together to ensure Shanghai.

Sinopec Shanghai experts to accept the securities newspaper interview that, if not
natural gas industry to plan, Shanghai, demand will always be "do not see in the end,"
over "gas shortage" has become worse.

Supply and demand gap larger Shanghai

According to reports, the recommendations in the relevant departments under the
direction of petrochemical pipeline is being revised, is expected a month later,
Puguang - Shanghai Natural Gas Pipeline of the specific route will be finalized.

According to deputy general manager of Shanghai Jin Dongqi gas network company
introduced two years ago, the Shanghai market demand for natural gas, only 400
million cubic meters, total demand in 2005 and quickly increased to 1.9 billion cubic
meters, the rapid growth.

The major source of local air, "Western Gas" and "the East China Sea gas." Among
them, China's oil and gas company (the "PetroChina") and "Western Gas" supply up
to 10 billion cubic meters; China National Offshore Oil Company (the "CNOOC"),
the "East China Sea gas," basically stable at 600 million cubic meters. Supply and
demand gap of nearly 3 billion cubic meters. Experts say, because in recent years,
"West gas" pipeline upstream cities have asked, "gate valve manifold," PetroChina is
expected to supply gas to Shanghai will be reduced. Therefore, the relevant
departments that need to be added from the oil.

Sinopec was announced this year, the town in Sichuan Xuanhan Puguang Puguang
gas field discovery. According to the plan, Puguang gas pipeline outside the business
volume by 2008 to achieve four billion cubic meters / year more than 2010 business
volume eight billion cubic meters / year.

Sinopec Sichuan and Shandong pain care

According to reports, the NDRC also hope that after the diversion pipeline to bring
power for the entire Zhejiang.

At present, Jiangsu and Zhejiang region without the formation of gas pipeline network
system. Jiangsu province in 2010 natural gas demand will reach 130 to
16,200,000,000 cubic meters. This means that even if the dumping Sinopec, the
power of the Puguang field, but also hard to withdraw from the market outside of
Jiangsu and Zhejiang.

Sinopec to confirm an interview: to abandon the market in Sichuan and Shandong
market will make the company very difficult.

Experts say not only is natural gas reserves in Sichuan province is a province of
natural gas consumption, Lutianhua and other large chemical plants are located in the
local. From a scientific point of view, compared with the direct combustion of natural
gas, chemicals do more to create value, the priority should be supplied; Second, from
an economic perspective, the transport cost is the main component of natural gas
prices, it will Puguang gas to Shanghai, a certain more costly than local use.

In addition, Sinopec Shandong is also contested. 70's, the local natural gas has been
supplied from the oil of the Zhongyuan Oilfield. But since 2000, the Central Plains
into the mining field late decline, leading to the provincial government introduced in
the Shandong Changqing oil field.

As the two giants of Shandong Province in the south and north boundary, on which so
much tension in Sinopec. So the company began planning pipeline Puguang to Jinan,
Shandong Province to relieve the emergency. Now it is evident that has not too

LNG price threshold will be met

CNOOC has also heard from the news, the company has signed a few months ago and
the oil companies in Malaysia for 25 years the framework of the agreement, imports
of LNG will supply all of Shanghai.

But Sinopec's natural gas experts are skeptical. In his view, the contract was formally
signed the framework agreement to too many uncertainties, the price will become the
biggest obstacle.

Need to import LNG and domestic gas prices do the same, together 5-6 U.S. dollars /
million British thermal unit interval, while the international market price has reached
eight U.S. dollars / million Btu or more. The seller does not make sense choose a
lower offer buyers, which means that imported LNG will be difficult to resolve in
recent years, Shanghai's more pressure.

Sinopec experts believe that natural gas is clean energy, it is noble energy. According
to our current economic strength, and the United States, Japan and other countries do
not have the advantage of competition for this resource. Planning authorities should
have a reasonable and appropriate suppression of natural gas projects around the blind
launched enthusiasm.
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