China's National Development and Reform Commission (NDRC) has announced that the construction of the West-East natural gas transmission project II is to start officially at the end of 2007. Currently, the bidding processes for various supply contracts within the project framework are ongoing, and the most important of these biddings, naturally, concerns pipe steel.
The main aim of the West-East natural gas transmission project II is to build a second pipeline from the northwest corner of China to the eastern and southern tips of the country. The planned scale of natural gas transmission on this line is 30 billion cubic meters per year. Project II is expected to start transmitting natural gas mainly from Central Asian countries such as Turkmenistan and Kazakhstan to China from 2010 onwards. The total length of this pipeline will exceed 7,000 km; with the main line accounting for 4,859 km. The project will consume an estimated total of four million tons of steel.
Since August 27, 2007 when China National Petroleum Corporation - the contractor of this project - announced that the detailed map of the pipeline had been completed, the nationwide invitation for pipe steel bidding also commenced. In the most critical issue, X80 sheet was selected as the pipe steel for the main line. Due to the special geographical environment in the rural northwestern area of China and the huge gas pressures inside the pipeline (12 MP), the requirements for the pipes are very strict. The thickness of the pipe walls will reach 18.4 mm along parts of the route where the terrain is the most difficult.
In early 2007, to ensure the most successful X80 pipe, the project authorities tested Baosteel's High Temperature Processing (HTP) and Wuhan Steel's Thermo Mechanical Control Processing (TMCP) methods for trial production of natural gas pipe. After repeated tests and welding work, the pipe quality required was finally determined in March 2007.
However, although Baosteel and Wuhan Steel are the leading X80 producers in China, and though Baosteel has even successfully produced X120 - the highest quality pipe steel which is only produced by four steelmakers in the world, they failed to sign sales contracts with the contractor China National Petroleum Corporation due to their high price and some other issues. Even in late September, China National Petroleum Corporation sent a delegate to Baosteel to discuss the issue of X80 supply; however, no agreement was reached. In the West-East natural gas transmission project I, 470,000 mt of Baosteel's qualified steel was used to produce the main pipe line, accounting for 66 percent of the total sheet for welding pipes in that project.
However, for project II, deals have been concluded only with Shagang and Magang for X80 pipe, indicating that many other local steelmakers in China are now exerting efforts to become major suppliers of this product.