abce certificate
Sunday, 20 July, 2008, 02:20 GMT | more prices >>

China hunts big game



By Upstream staff 

China Petroleum Pipeline (CPP) will only focus on contracts abroad that are worth $200 million or more in order to face rising competition from foreign counterparts, a company executive said on Friday.

"Now it's not an issue of capability or technology. The core issue is if prices are reasonable or not," said general manager Su Chifeng to Reuters.

CPP controls half of China's rapidly growing domestic pipeline business and is a leader in overseas oil and gas infrastructure engineering.

"We need to make decent profits. We have already made our names known ... (and) so will focus on big deals worth $200 million or more," he said.

Apart from rising costs in materials and equipment globally, China now has much higher labor costs compared with India.

A Chinese pipeline worker on a foreign project earns $1,000 a month while an Indian worker only $300, said Su.

CPP recently lost out in a tender to build a 500 kilometre pipeline in Malaysia to an Indian firm which bid 23%, over $200 million, lower.

CPP is currently in talks with Russia to build part of its first oil link to Asia, which has a branch to supply China.

CPP already has a contract to lay 170 kilometres (mostly in swampy area with hostile weather conditions) of the 2700 kilometre line, but negotiations for more work are tough.

"Russia wants us to build more but the prices they offered are unreasonably low."

Russia's pipeline monopoly Transneft has said it is likely to delay the launch of the 600,000 barrels per day pipeline by at least nine months to the third quarter of 2009 due to slow construction works.

For the next few years, CPP will focus on big projects in China, such as the $20 billion second West-East pipeline which extends for a total of 9102 kilometres, linking gas fields in Turkmenistan to China's southern coast.

Parent company China National Petroleum Corporation (CNPC) has agreed to import 30 billion cubic metres of gas a year from Turkmenistan, nearly half China's current consumption.


Friday, 07 March, 2008, 14:10 GMT  | last updated: Friday, 07 March, 2008, 14:39 GMT

No petty cash: CPP will only consider foreign work over $200 million
 

e-mail this article to a colleague


to email:  from:
comments: