OREANDA-NEWS.  October 24, 2012. Construction began on China’s third pipeline, which will carry natural gas from the nation's resource-rich western regions to the energy-starved east, Xinhua News Agency reported.

The 125 billion yuan (USD 20 billion) project, expected to be completed in 2015, will potentially transfer 30 billion cubic meters of gas annually.

Annually 25 billion cubic meters of natural gas will come from Central Asia and 5 billion cubic meters of coal gas from the Xinjiang Uygur autonomous region to central and eastern China, according to China National Petroleum Corp, which owns the project.

The 7,378 km pipeline will cross 10 provinces and autonomous regions, including Xinjiang, Gansu and Ningxia, having one trunk line, eight branch lines, three gas storage facilities and a liquid natural gas peak-shaving station.

Natural gas consumption has been growing rapidly in the world’s second-largest economy, rising 21.5 percent to 130.7 billion cubic meters last year. At full capacity, the project will increase the share of the cleaner-burning fuel in China’s primary energy consumption by 1 percentage point from the current 4.6 percent, said Liu Tienan, head of the National Energy Administration.

Increasing the share of China’s natural gas consumption by one or two percent works out to a replacement of 76.8 million tons of coal and elimination of 130 million tons of carbon dioxide, 1.44 million tons of sulfur dioxide and 660,000 tons of dust emissions, according to Xinhua.

"The completion of the project will help millions of people in the areas along the pipelines to use clean energy," said Vice-Premier Li Keqiang in a congratulatory letter. "It will improve China's energy structure and contribute to the country's target of reducing carbon emissions."

Meanwhile, the construction of the project will bring business opportunities to related industries such as equipment manufacturing and material technology, he said.

The new project, which will boost gas imports from Central Asia, will also prompt the government to advance its pricing reform on natural gas, said analysts. Gas imports are losing money at present because of price regulation, according to the Shanghai Daily.

The reform, which will bring prices more in line with commodities markets, is expected to eventually result in higher costs for consumers and benefit PetroChina and other state energy giants that are importing more gas to meet the growing demand.

In 2004, PetroChina completed China’s first west-to-east pipeline, which ends in Shanghai. Construction of the second phase started in 2009, with a branch line to reach Hong Kong by the end of this year. The first two required a 290 billion yuan investment in total.