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Shell still sweet on Sino pipe

Despite prolonged negotiations between Royal Dutch/Shell and its China partners, the Anglo-Dutch giant has reiterated its commitment to the US$5.2 billion 4,000 km west-east natural gas pipeline project. Earlier reports had stated that all negotiations were at a standstill despite the fact that commercial operation of the pipeline would begin at the end of the year.

Shell still sweet on Sino pipe

Shell China Exploration & Production Co president, Yves Merer, was quick to defend his company's commitment to the project and that all parties "will continue with the negotiations and hope that we reach a satisfactory conclusion as soon as possible". Shell officials have stated that there was nothing to worry about as no deadline had been set for the conclusion of the negotiation process.

The situation has gotten tense due to the fact that the deadline for the start of commercial operations is fast looming and the fact that final contracts between the stakeholders - Shell (15%), ExxonMobil (15%), Gazprom (15%), Sinopec Corp (5%) and PetroChina (50%) have not been signed yet.

Then there is the issue of appeasement that keeps cropping up. According to Shell China's managing director of gas power, Heng Hock Cheng, his company was not involved in the project because it wanted to please the Chinese government in order to gain support for other projects.

"For a project of that size, we do not participate on public relations basis. The project is in line with own value, own strategy and own investment criteria," exclaimed Heng.

He also reiterated that Shell had a good working relationship with PetroChina and that the company was investing in China for the long term. In the pipeline are plans to increase Shell's investment in the country to around US$5 billion from the current sum of US$1 billion.

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