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Baosteel Enters World's UO Pipe Export Markets As New Supplier
China's Baosteel Co has made its entrance into the world's UO pipe export markets as a new supplier in the wake of the company's successful offer to provide UO pipes for a gas pipeline project in Queensland, Australia.

Baosteel is contracted to supply a total of 218,000 tons of X70 42in UO pipes for the Queensland Curtis LNG project under Queensland Gas Co (QGC), part of BG Group PLC. The project is intended to lay a gas pipeline measuring 575 km overall to transport coal seam methane from western Brisbane to Gladstone where the gas will be liquefied for export sales. Plans call for extracting methane from coal seams located in central Queensland.

QGC invited offers to take a total of 218,000 tons of UO pipes from the world's various steelmakers. The invitation brought separate offers from Baosteel and a major integrated steelmaker in Japan. Each offer was aimed at meeting the whole UO pipe requirements. There were forecasts that the Japanese steelmaker would land the supply contract in due course, given the company's track record of global UO pipe supplies. Actually, however, Baosteel will become the winner with the low price the company quoted.

In Australia, negotiations are under way on line pipe supplies for three gas pipe projects in Queensland besides QGC's. Of the three projects, the first one under Arrow Energy calls for 100,000 tons of ERW pipes, a second one under Santos for 160,000 tons of 42in UO pipes, and a third one under Origin for 130,000 tons of 42in UO pipes. Each project is intended to transport coal seam methane gas to Gladstone for export sales in liquefied form.

Most of the UO pipe deals for gas pipelines usually concern supplies in construction of an offshore-to-onshore pipeline. In this connection, QGC is thought to have set a high value on Baosteel's remarkable performance of UO pipe supplies for China's overland pipeline projects such as the West-East natural gas pipeline project.

Until now, Japan's integrated steelmakers have enjoyed a considerable advantage over rival European steelmakers when it comes to UO pipe exports to Australia thanks to Japan's geographical proximity to Australia. With Baosteel's negotiated Australian deal this time, there are forecasts that Australia's UO pipe market will come under a major change in the near future. Also, it is likely that Baosteel will pose a threat to the Japanese steelmakers in UO pipe deals with Australian buyers such as Origin and Santos.

Meanwhile, there is speculation, too, the status of China National Offshore Oil Corp (CNOOC) as a shareholder in QGC may have led to Baosteel's firm UO pipe deal with QGC. At present, CNOOC has a 5% interest in QGC. The Chinese interest is expected to rise to 10% in the near future.
last modified : Wed 24 Mar, 2010 [11:31]
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