According to the conclusions reached at a recent important multi-department seminar focusing on China's future energy needs, the Chinese government will have to invest significantly in the construction of nationwide oil & natural gas pipeline networks over the next 15 years at least, in order to meet huge increases in demand for both oil and natural gas.
China completed the construction of its first oil & natural gas pipeline in 1970. To date, the country possesses four main oil-rich areas and five principal areas for natural gas reserves, with a total oil & natural gas pipeline length approaching 25,000 km. Most of China's oil & natural gas is transported to refineries, chemical plants and docks for further processing or transportation.
Compared to most developed countries, China's oil & natural gas pipeline network still lags far behind. China has the fifth largest crude oil reserves in the world, but the total length of the country's oil & natural gas pipelines is less than one percent of the world average. Of the total annual quantity of oil & natural gas transported in China, only about two percent is transported by pipeline.
Furthermore, the length of pipelines used for the transportation of finished oil products only accounts for three percent of all pipelines in China; this compares to a world average of 16 percent. So far in China, the transportation of finished oil products has depended on the rail system.
China's demand for oil & natural gas is currently experiencing a trend of sharp increase due to the following two reasons:
Firstly, China's rapid economic growth has been founded mainly on its manufacturing and processing industries. While people all over the world enjoy products made in China, Chinese manufacturers and related enterprises, such as those involved in logistics, are consuming more and more energy.
Secondly, China's energy consumption structure is changing. Compared to the traditional energy coal, the use of oil & natural gas can help achieve average energy savings of 30-40 percent and reduce investment costs by 10-30 percent. In addition, the use of oil & natural gas mean a significant reduction in air pollution.
The principal Chinese government departments involved in planning in this area of oil & natural gas now face a series of urgent missions. One of these is the selection and use of high quality steel pipes to guarantee transportation safety. Thus, high quality pipe steel faces a promising future. In the field of natural gas pipelines, X65 and X70 steel will be the main types applied; for oil pipelines, X60 and X65 steel will be used; while for finished oil products - X52 and X60 steel are the categories required.
Furthermore, Baosteel has successfully produced X120 pipe steel - the world's top strength pipe steel - and mastered the latest state-of-the-art welding technology in early 2007. This not only makes Baosteel China's No. 1 and the world's No.4 steelmaker in terms of mastering X120 production technology, but it also provides evidence that X120 pipe steel technology has been high on the agenda in China.Apart from Baosteel, Baoji Petroleum Steel Pipe Co., Ltd (BSG) has also successfully produced X80 large-caliber spiral submerged arc welded steel pipe recently. Furthermore, the government is regrouping domestic pipe makers in order to produce higher quality materials for pipelines. For this purpose, Liaoning Province-based Liaoyang pipe plant has merged with Baoji Petroleum Steel Pipe Co. Ltd of China Petroleum Materials and Equipment (Group) Corporation, as a first step in the process.