SICHUAN GAS DEV & CONSERVATION

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The Sichuan Gas Development and Conservation Project comprises three main components: a restructuring component, an investment component, and an institution building component. The restructuring component includes implementation of the first phase of restructuring the upstream oil and gas sector, based on the recommendations of an ongoing restructuring study, including commercialization and corporatization of China National Petroleum Corporation/Sichuan Petroleum Administration (CNPC/SPA) through their transformation into joint-stock companies, introduction of a commercial accounting system and implementation of productivity enhancement and related human resources development programs. The investment component includes gas field development in Eastern Sichuan through the drilling of about 100 wells, seismic survey and interpretation, and construction of related surface facilities; gas field stimulation and rehabilitation of about 90 wells in Eastern Sichuan and 100 wells in Central Sichuan; and expansion as well as rehabilitation and environmental upgrade of SPA's gas transmission and distribution system. The institution building component includes technical assistance and training for the implementation of the above two components as well as for national petroleum education to upgrade the teaching and research capabilities of the local petroleum institutes and development of exchange programs between the local and foreign institutes. The project aims to: (a) support the implementation of the upstre and gas sector restructuring; (b) rationalize both the levels and stru gas pricing; (c) promote rational gas allocation; (d) reduce acute gas shortages and environmental degradation in Sichuan through increased g production (and avoidance of coal consumption) and energy conservation improve the efficiency of gas production and optimize ultimate recover reserves through sound reservoir management and state-of-the-art enhan recovery technology; (f) enhance the safety, reliability, operational efficiency and environmental management of the gas transmission and distribution (T&D) system, including the reduction of gas leakage whic in turn, reduce methane emissions and the greenhouse gas effect; and ( strengthen the institutional capabilities of China National Petroleum Corporation and the Sichuan Petroleum Administration.