China Petroleum and Chemical Corp. (Sinopec), China's second largest oil and gas producer, has selected GE Oil & Gas compression technology for a new pipeline project designed to help ease natural gas shortages in the country's eastern commercial hub. GE and Sinopec are also forming a two-year strategic agreement to foster on-going cooperation between the two companies.

GE will supply eight centrifugal compressor packages and auxiliary equipment for Sinopec's Sichuan to East China pipeline, which will transport natural gas from the Puguang field in Sichuan to Shanghai in China's eastern region, to help offset fuel shortages there. The pipeline, which will have an initial capacity of six billion cubic meters of gas that will be increased to 15 billion in the future, is scheduled to begin service in 2009.

The main trunk of the new pipeline will cover more than 1600 kilometers and will cross several Chinese provinces including Sichuan, Hubei, Anhui and Zhejiang. An 842-kilometer secondary line will originate from Yichang City in Hubei and end in Puyang City in Henan, another central province. Two shorter branches will be located near the Puguang gas field and one in the east near Shanghai.

"This project supports China's plans to more than double the share of natural gas in the country's energy mix by the end of the decade, in an effort to increase the use of cleaner fuels to meet China's enormous energy needs," said Claudi Santiago, president and CEO of GE Oil & Gas. "It will deliver natural gas from Puguang, which is Sinopec's largest field, to the thriving eastern region where fuel demand is very strong."

Under the terms of the strategic agreement between GE Oil & Gas and Sinopec, the two companies will deepen their cooperation in new product research and development, the application of new technology, products and technology standardization, quality management, equipment maintenance and technical training.

"This agreement provides a framework for building a longer-term, mutually productive association with Sinopec, a company that is playing a vital role in supporting China's vibrant economy," said Santiago. "Forming local and regional agreements is at the core of GE's efforts to increase our presence in the country, which represents one of the world's greatest growth opportunities."

GE hopes to double its China revenues to $10 billion by 2010. As part of GE's overall growth in China, the new Sinopec pipeline project further expands the presence of GE Oil & Gas technology in the country. Two recent examples: Last year, GE Oil & Gas was selected to supply compressor trains for two milestone projects in China that will feature the world's largest coal-based propylene plants. In 2006, the business was selected as an equipment supplier for the expansion of China's landmark West-East Pipeline Project, one of the country's most critical infrastructure projects of the 21st century.

Sinopec is an integrated energy and chemical company with upstream and downstream operations. Its principal activities include exploring, developing, producing and trading crude oil and natural gas; processing crude oil into refined oil products; and producing and distributing chemical products.

GE's Oil & Gas business is a world leader in advanced technology equipment and services for all segments of the global oil and gas industry. With headquarters in Florence, Italy, the company offers complete solutions for production, LNG, transportation, storage, refineries, and petrochemicals, as well as pipeline integrity including pipeline-related software and pipeline asset management. Through its recent acquisition of VetcoGray, GE Oil & Gas has added products, systems and services for drilling, completion and production within onshore, offshore and subsea applications.