ORDER REPRINTS PERMISSION TO COPY

Construction Overview

Pipeline & Gas Journal’s 2005

International Pipeline Construction Report
By Rita Tubb, Managing Editor
ipeline & Gas Journal’s 2005 International Pipeline Construction Survey
indicates 54,068 miles of oil and gas pipelines are under construction and
planned. Of these, 42,574 miles account for projects in the planned stage
and 11,494 miles represent pipelines under construction. This year’s figures
show a 6,310-mile increase over those reported a year ago when the international
sector accounted for 47,758 miles of new and planned projects.
While international pipeline activity has shown relatively slow growth over
2003-2005, proposed additions in 2006-2008 could result in a record number
of new pipeline miles. Much of the interest in completing languishing planned
projects will be rekindled by higher oil and gas prices, increased demand in
developing nations and the outlook for LNG’s role in the U.S., Europe and
other developing gas markets.
Supporting this is the recently released BP 2005 Statistical Review of
World Energy. The Review indicates much of the recent demand for oil
and gas was fueled by Asia, where Chinese consumption rose by 900,000
bpd, almost all of which was accounted for by imports.
On natural gas, the Review notes that international trade rose 9% in 2004.
Pipeline shipments rose by more than 10%. Russia accounted for the largest
increment, but growth was widely distributed across the world. Shipments of
LNG rose by 5.4% last year, slightly below 2003.
A strong energy consumption showing by not only China, but all developing Stolt Offshore’s LB220 is one of several pipelay vessels credited
nations, is reported in ExxonMobil’s 2004 Corporate Citizenship Report. As the with installing the 745-mile Langled pipeline.
data show, by 2030, energy demand will grow by 50%. Close to 80% of the energy
demand increase will occur in developing nations. Europe is also an emerging gas market. Indigenous supply cannot keep up with demand and future gas
supplies will be piped in from much greater distances.

P&GJ’s Construction Overview

Following is a discussion of some, but not
all, of the major projects planned and under
construction in the six basic nation groupings
used in this article, (see map below). More
information is provided in P&GJ’s sister pub-
lication Pipeline News.
Asia/Pacific Region
Again, a number of nations in this region
with fast-growing energy demands account for
a significant number of planned developments,
while actual construction lags. Of the 22,129
miles of new and planned pipelines, only 2,181
miles account for actual construction.
One of the region’s significant projects is a
588-mile gas pipeline being built for China
National Petroleum Corp. by Beijing Urban
Construction. Work started earlier this year on the
Shaanxi-Beijing No. 2 transmission line with a

Pipeline & Gas Journal / August 2005 / www.pipelineandgasjournal.com

throughput of 12 Bcm/y. The line will supply gas
to Beijing, Tianjin, Shanxi, Hebei and Shandong,
allowing PetroChina to service gas markets in
five provinces and municipalities in north China.
Future plans call for connection of both the
Shaanxi-Beijing Line 1, completed in 1997, and
the Shaanxi-Beijing Line 2, planned for comple-
tion in September 2005, to be connected to the
West East Gas Transmission Pipeline in the future.
Offshore gas fields are becoming a signifi-
cant part of China’s gas supply. The Chunxiao
gas field in the East China Sea, being devel-
oped by China National Star Petroleum, is
expected to become a significant producer in
the next decade. The company estimates
reserves at more than 1.6 Tcf.
Imported LNG will likely be used in
China’s southeastern coastal region, with pos-
sible expansion in the north, in the event
Russian supplies fail to materialize.
In India, New Delhi-based Engineers India
Ltd. was awarded two contracts involving
pipeline projects from Hindustan Petroleum
Corporation Ltd., (HPCL). The first is for
consultancy services for the 650-mile cross-
country Mundra-Delhi multi-products
pipeline to connect Mundra Port Guijarat state
to New Delhi. The line is routed through four
states in the northern part of the country with
tap-off locations at Palanpur, Ajmer, Jaipur,
Rewari and Bahadurgarh, along with all asso-
ciated station facilities including intermediate
pumping stations at six locations.
Construction will require 30 months, pushing
completion to 2007.
The second is for engineering and project
management consultancy services for HPCL’s
(Pune)-Sholapur multi-products pipeline. The
project involves de-rating sections of the exist-
ing Mumbai-Pune multi-products line and its
extension to Sholapurvia Miraj. This involves
several hundred miles of 12- and 14-inch diam-
eter cross-country pipeline. No completion
date for the second project has been set.
Also under way is a $422 million project
being executed by Global Industries, in con-
sortium with Larsen & Toubro Ltd., to replace
approximately 115 miles of oil and gas
pipelines for ONGC off Bombay. In the 2005
work season, 14 lines, totaling 48.93 miles
will be replaced, while 26 pipelines, with
lengths totaling just over 70 miles will be
replaced in the 2006-07 season.
In the Gulf of Thailand, Hyundai Heavy
Industries is constructing a 376-mile pipeline
to transport gas from offshore fields to
Malaysia. The contract, valued at $280 mil-
lion, is scheduled for completion next July.
Planned Projects
The high level of planned projects in the
Asia/Pacific region is not surprising when ener-
gy use in China, India and other developing
Asian nations is likely to increase more rapidly
than in other regions over the next decade.
Also in this region, Thailand, Malaysia,
Indonesia, Vietnam and Java have pipelines
under construction or planned at this time.
Australia
In Australia, despite a decade of strong eco-
nomic growth and being one of the world’s
fastest growing industrial countries, on-going
tensions between pipeline companies and regula-
tors has dampened construction activity and may
well discourage the entry of new investors.
Regardless, forecasters think Australia will see a
significant amount of future pipeline activity.
Construction activity is now limited to a sin-
gle project offshore where Allseas is construct-
ing a 70-mile pipeline for Woodside Energy’s
Otway Gas Project. The project includes an off-
shore platform in the Thylacine Field and a gas
plant to be built by Technip near Port Campbell.
Production is slated in mid-2006.
A recently commissioned feasibility study
that is drawing interest is from the Australian
government for an 1,800-mile Transconti-
nental pipeline to ship gas from the Carnarvon
and Browse offshore basins to southeastern
domestic markets.
Although no date for construction has been
set, in May, the AGL-Petronas consortium
(Australian Gas Light Company and Petronas
Australia Pty Ltd.) awarded a $25 million Front
End Engineering and Design (FEED) contract
to GHD Pty Ltd. for the 1,255-mile Australian
leg of the multibillion-dollar Papua New
Guinea (PNG) Pipeline. Contract terms call for
GHD to design the pipeline segment from Cape
York to Gladstone and southeastern gas mar-
kets. Also in this phase, regulatory, financial
assessment, environmental and native title
clearance processes will be undertaken.
The likely route will be down the east coast
of Queensland with a branch to Mt Isa. Upon
completion of the FEED contract, the next
step will include finalizing the pipeline con-
figuration, completing commercial arrange-
ments with producers and selecting a pipeline
contractor. Project participants are targeting
initial gas deliveries to customers in 2009.
Former Soviet
Union/Eastern Europe
Once again, the considerable number of
cross-border projects waiting to be imple-
mented account for a much greater number of
planned pipeline miles than actual construc-
tion in nations making up the Former Soviet
Union and Eastern Europe. Of the 16,564
miles of new and planned projects, only 3,830
miles represent work now in progress.
Despite numerous challenges, the region
did see completion of the Baku-Tbilisi
Ceyhan (BTC) pipeline to export Azeri, and
possibly up to 600,000 bpd of Kazakhstani
oil, along a 1,040-mile route from Baku,
Azerbaijan via Georgia to the Turkish
Mediterranean port of Ceyhan, allowing oil to
bypass the Bosporus Strait. A BP-led consor-
tium began operating the 1-million bpd
pipeline in May with first tanker deliveries
scheduled later this year.
The South Caucasus Pipeline (SCP), aka.
Baku-Tbilisi-Ezrurum, or BTE, planned for
development by an eight-company consor-
tium led by BP, will parallel the BTC oil line
for most of its route before connecting to the
Turkish infrastructure near the town of
Erzurum. Completion of the $1 billion, 550-
mile line is to be undertaken in stages. The
Pipeline & Gas Journal / August 2005 / www.pipelineandgasjournal.com
project is expected to add 110 million tons of
oil equivalent between 2006-20. The total cap-
ital cost of the first stage development of the
Shah Deniz field and SCP is estimated at
about $3.2 billion. Completion is scheduled to
coincide with the Shah Deniz project’s first
contracted exports to Turkey in 2006.
Pipeline oil exports are scheduled to begin
in 2008 from Atasu in northern Kazakhstan to
Alataw Pass in China’s northwestern Xinjian
region. Construction of the $815 million, 613-
mile pipeline began this year as part of a $3
billion project that will eventually stretch
1,860 miles from Atasu to Dushanzi, China.
One of the planned pipelines in this region is
the 2,142-mile cross-border Nabucco Gas
Pipeline. Five companies — Austria’s OMV
Gas, Botas of Turkey, Bulgargaz of Bulgaria,
Transgaz of Romania and MOL of Hungary
have formed a company to build the new
pipeline to transport gas from the Caspian and
Middle East to central and western Europe. The
new venture group — Nabucco Gas Pipeline
International Ltd. — will be responsible for
preparing the financial documents and coordi-
nating the subsequent project phases. The pro-
posal carries a $5.5 billion price tag and is not
expected to begin operation until 2011.
Also in recent weeks, ENI announced that
the Trans Austria Gasleitung (TAG) pipeline
which transports Russian gas to Italy through
Austria will be expanded. By 2008, the trans-
port capacity will be increased not less than
3.2 billion cubic meters per year. Work will
begin in September.
Investment for the expansion amounts to
some 130 million euro and the work will be car-
ried out by TAG GmbH, a company jointly
owned by ENI and the Austrian company OMV.
In other news, the TNK-BP-led venture that
plans to link the Russian natural gas grid in
Siberia to China and possibly South Korea via
a pipeline from the Kovykta gas condensate
field in Russia’s Irkutsk region says the proj-
ect has been delayed because of a late con-
struction start. Field production is now slated
 Construction Overview

Growing World Energy Demand

in 2007. Kovykta, which lies 279 miles north-
west of Irkutsk city, contains an estimated 1.9
By 2030, energy demand will grow by 50%. The
trillion cubic meters of gas.
efficient use of energy will be increasingly important.
Russia’s Gazprom is the world’s largest gas
Source: ExxonMobil’s 2004 Corporate Citizenship Report.
producer, holding approximately 20% of the
global gas reserves. Currently, Europe is
Gazprom’s only export market. For this reason,
Gazprom is still interested in constructing a
pipeline from Russia directly to Germany, with
an extension to Great Britain and other coun-
tries. More than $50 million has been invested in
feasibility studies to build the North-European
Gas (NEG) Pipeline Project. One of its most
important features is that it will directly connect
Russian producers with customers in western
Europe, bypassing transit countries. The total
cost of the planned project is $6 billion. In order
to implement the project, some 460 miles of
additional pipeline would be needed in the
Vologda and Leningrad regions to reach the
seashore near the town of Vyborg.
In looking at Russia’s lackluster pipeline
construction, some cite funding difficulties and
advances by Kremlin policymakers toward
increased state influence in the energy sector.
Possibly for these reasons, the most signifi-
cant construction activity is in the Russian Far
East where the Shell-led consortium Sakhalin
Energy Development Ltd. is moving ahead with
the Sakhalin II development — the world’s
largest single integrated oil and gas project.
Slated to begin operations in early 2007,
almost 1,242 miles of pipeline construction — with estimated recoverable reserves of 12.2 pipeline construction increased over the past
1,139 miles onshore and 103-miles offshore — Tcf. Norsk Hydro is the acting operator in the year, going from 5,066 miles to 6,795 miles. Of
is being undertaken in this phase. Construction development phase, and Norsk Shell is sched- the new and planned pipelines, only 1,804 miles
of the onshore oil and gas pipeline that will run uled as operator in the production phase. As represent work now in progress.
from Piltun in the north of Sakhalin Island via part of the development of the world’s longest One of the most significant projects is the
the Onshore Processing Facility, to submarine pipeline — the 746-mile Langled $600 million, 620-mile West African Gas
Prigorodnoye in the south, is well under way. Pipeline — is being constructed here. Pipeline (WAGP) Project that will traverse both
The two pipeline systems are each 487 miles in Work associated with the development is well on and offshore from Nigeria’s Niger Delta
length. (See P&GJ, April 2005, for details). under way and a number of vessels are involved region to its final planned terminus at Ghana.
As to other plans, the Khabarovsk Krai in laying the Langled Pipeline. Pipelaying began Willbros West Africa was awarded a contract by
government is considering building the 1,429- in April and is due to finish next year. The job of West African Gas Pipeline Co. Ltd. to install cus-
mile KoRus Pipeline to transport 25 Bcm/y of readying the Langled pipeline has been awarded tody transfer metering in Nigeria and a 30-inch
natural gas from Sakhalin through North to Halliburton. The system is due to carry natural gas pipeline from the existing Escravos
Korea and on to South Korea. Further exten- Ormen Lange gas from its processing facility to Lagos gas pipeline system to the initial compres-
sions could service Japan and other nations. the UK beginning in October 2007. sor station at Lagos Beach, and the point of
Also being discussed by Japan Petroleum Norway’s other major project, Snøhvit in departure for the offshore section.
Exploration Co. (JAPEX) is a gas pipeline the Barents Sea, represents Statoil’s first and Additional pipelines and regulating and
from Sakhalin Island to Japan by late 2008. Europe’s only export facility for LNG. The metering facilities for the onshore portions of
The Sakhalin-Japan Project would involve 33,000-ton barge-mounted production plant the project in Benin, Togo, and Ghana are
construction of a 700-mile subsea line linking for Snøhvit left the Dragados yard in Spain on included in the project scope, as well as the engi-
Cape Soya, Russia, with Niigata Prefecture, June 27 aboard the Blue Marlin heavy-lift neering, procurement, construction and tie-in of
Japan. Engineering, procurement and con- vessel for its voyage to the Melkøya site in the initial compressor station and land pipeline
struction is expected to take five years. northern Norway. The plant is due to export section. Groundbreaking ceremonies were held
5.7 billion cubic meters of LNG annually to at Takoradi, Ghana, on Dec. 3, 2004. Project
Western Europe & EU the U.S. and Europe beginning in 2006. completion is expected late next year.
Countries in western Europe and those Laying of the 89-mile main pipeline to carry Willbros is also working on Phase II of the
making up the European Union are currently the unprocessed wellstream from Snøhvit to Amenan Kpono Gas Pipeline project.
the world’s second-largest energy consumer land was recently completed. Conclusion of the Willbros (Nigeria) Limited was contracted by
behind the U.S. Although planned and new pipelay work marks the completion of the Stolt Offshore West Africa to install and pre-
pipeline construction lags in the region, grow- world’s longest multiphase-flow pipeline. When commission the onshore portion of the 24-
ing demand could increase additions in the the pipeline becomes operational in 2006, it will inch gas pipeline to provide additional feed to
next three to four years. provide valuable information on multiphase the NLNG Plant on Bonny Island.
The most significant pipelines scheduled flow transport over long distances. Completion is slated later this year.
for near-term completion are part of two In Egypt, Apache Corp. is developing a
world-class developments in Norway to devel- Africa pipeline to link its Qasr fields with a gas supply
op the Ormen Lange and Snøhvit fields. While crime, corruption and ethnic unrest hub at Apache’s Shams gas field. Plans call for a
Ormen Lange, in the Norwegian Sea, is make security an issue in a number of African 22-mile, 24-inch diameter pipeline from Qasr to
Norway’s second-largest natural gas discovery nations, it is also a region where new and planned Shams; a 37-mile, 18-inch diameter pipeline

Pipeline & Gas Journal / August 2005 / www.pipelineandgasjournal.com

 Construction Overview
from Shams to Tarek; and a 26-mile, 20-inch
pipeline from Shams to Obaiyed. The project
cost is estimated at $75 million and should be
operational later this year.
In other news, Nigeria and Algeria are seek-
ing the World Bank’s assistance to construct the
$7 billion, 3,700-mile Trans-Saharan Gas
Pipeline to deliver natural gas from those two
countries to European markets. The pipeline
route will extend from North Africa to Beni Saf
before crossing the Mediterranean and making
landfall in Almeria, Spain. Medgaz will be
responsible for the 124-mile subsea portion of
the project. The pipeline will transport up to 7
Bcm of gas per year.
According to reports, Kenya and Uganda
may extend an existing multi-product
pipeline. Construction was scheduled to begin
in 2007 but has been delayed. Plans call for
the 198-mile, 8-inch diameter pipeline to run
from either Eldoret or Kisumu, Kenya to
Kampala, Uganda.
Middle East
Despite oil and gas activity being sidelined
in some areas by violence and conflicts, the
Middle East holds two-thirds of the world’s
proved oil reserves and one-third of the
world’s gas reserves. And those are just the
known reserves. For this reason, there remains
a huge potential for significant energy activi-
ty well into the future.
Once again, the region’s most significant
project is Dolphin Energy Ltd.’s natural gas
project in Qatar’s North Field, the largest non-
associated gas field in the world. The project,
which began in 2003, requires construction of
several pipelines, including two 48-inch diam-
eter subsea lines to transport North Field gas to
a processing facility in Ras Laffan. One of
these, a 230-mile pipeline that runs from the
processing facility to Abu Dhabi, UAE, is
being constructed by Saipem. Completion of
the $350 million project is slated for next year.
In another development off Qatar, J Ray
McDermott is set to begin work later this year on
a 60-mile, 38-inch diameter pipeline that will
extend from the field to an onshore terminal in
Qatar. The project is in support of ExxonMobil
Middle East’s Al Khaleej gas project. It is antic-
ipated to start up with pipeline gas sales to
domestic users in Qatar later this year.
Pipeline proposals include the Iran-
Pakistan-India gas pipeline (on the drawing
boards since 1994) that may get off the
ground next year.
Also under consideration is the $2.7 billion
Gulf South Asia (GUSA) pipeline from Qatar
to Pakistan that was first announced almost 13
years ago. The gas pipeline will require 1,007
miles of construction offshore and 75 miles
onshore. As proposed, it will transport 2 Bcf/d
with additional throughput planned later. The
expected time for construction is three years.
Still awaiting a construction start is
Egyptian Natural Gas Holding Company’s
244-mile south-north gas pipeline across
Jordan (Aqaba to Rehab) to bring LNG to
major power plants, industries and consumers
in Jordan, Syria and Lebanon. The pipeline is
Pipeline & Gas Journal / August 2005 / www.pipelineandgasjournal.com
known as the Arab Gas Pipeline or Jordanian
Gas Transmission Pipeline.
South/Central
America, Caribbean
The nations that make up Central America
have limited energy resources and consume
no natural gas. In the foreseeable future the
region will likely remain important to world
energy markets as a transit center for oil (via
the Panama Canal) and as a potential energy
transit center between North and South
America. At this time the region accounts for
no major pipeline activity.
In the Caribbean, only three countries have oil
and natural gas reserves - Barbados, Cuba, and
Trinidad and Tobago. Of these, Trinidad and
Tobago are important to the U.S. as a supplier of
LNG. As shown in Fossil Energy’s Natural Gas
Imports and Exports Fourth Quarter Report
2004, last year, more than 70% of U.S. LNG
imports were supplied by Trinidad and Tobago.
Trinidad and Tobago officials are also
working to bring the Eastern Caribbean
National Gas Pipeline to fruition. Earlier this
year details were released on a feasibility
study financed by the project’s current share-
holders — Guardian-Holdings, AIC Financial
Group and the IntraCaribbean Pipeline Co.
The study reportedly substantiated the techni-
cal and commercial viability of the project.
The planned route of the line has been altered
to extend from Tobago to Barbados, then on to
Martinique and Guadeloupe with connecting
spurs to St. Lucia and Dominica.
Since the new route eliminates earlier plans
for links to both St.Vincent and Grenada,
some opposition seems likely.
Once the project proceeds, construction is
planned in two phases, the first from Tobago
to Barbados in the 2006-07 timeframe and
from Guadeloupe to its termination point in
the 2008-09 timeframe. When completed, the
$550 million pipeline will transport 150
MMcf/d of natural gas.
Pipelines Planned &
Under Construction
While several South America nations seem
poised for significant energy developments,
the region currently accounts for only 379
miles of pipeline construction. Conversely,
they account for 3,171 miles of planned
pipelines, of which 1,093 miles represent
projects in Brazil.
As to construction under way, one of the few
significant projects that has progressed is the
$81.5 million, 379-mile Patagonia Pipeline. The
Argentine government contracted Emgasud, a
local contractor, to construct the pipeline that
will supply gas to the provinces of Chubut, Rio
Negro and Neuquèn in Argentina’s Patagonia
region. The 10- to 12-inch diameter line will
transport 1 MMcf/d of gas.
What could bode well for near-term construc-
tion is a decision by the Washington-based Inter-
American Development Bank to support a proj-
ect for a South American natural gas pipeline to
link Peru, Chile, Argentina, Uruguay, Brazil,
Bolivia and Paraguay. The project would require
the construction or expansion of pipelines in
Argentina as well as new infrastructure in Peru
and Brazil. A preliminary estimate of the needs
that could be covered with Peruvian natural gas
would be around 30 MMcm/d. No timeline has
been announced for a construction start.
Equally promising is an ambitious proposal by
Brazil’s national energy company Petrobras to
add 3,110 miles of new gas pipeline by 2007.
Central to the project is the 807-mile Southeast-
Northeast gas pipeline, Gasene, to link the
Campos and Santos Basins to northeast markets.
Petrobras’ transportation subsidiary
Transpetro estimates that 1,555 miles of oil
pipelines will be added to its network by 2010
that will require investments totaling $2 billion.
Petrobras also has eight offshore field dis-
coveries under study and forecasts that 34
additional offshore fields will be brought
onstream by 2010.
Fearing that local suppliers will not be able
to meet the demand for planned
Petrobras/Transpetro oil and gas pipeline
projects, Transpetro has expressed interest in
attracting U.S. companies to render pipeline
engineering, construction and assembly serv-
ices to the on and offshore sectors.
The region also accounts for a number of
other projects under study and in the planning
phase that are discussed in detail in P&GJ’s
sister publication, Pipeline News. P&GJ
Literature Cited:
World Energy Outlook, Energy Information Administra-
tion, Washington, D.C. ; BP Statistical Review of World
Energy, June 2005; ExxonMobil’s 2004 Corporate
Citizenship Report. Pipeline News, July 2005.