OREANDA-NEWS. November 21, 2013. China's first coal-to-gas (CTG) project will soon start pumping gas to Beijing to help meet winter heating demand, coming online after a one-year delay due to an unfinished pipeline, Reuters reported, citing an industry official involved on the project.

China is spending USD14 billion on projects to turn coal in remote regions into natural gas, a costly bet that could help meet the country's surging demand for the fuel.

State-owned utility Datang Power, parent of Datang International Power Generation Co Ltd, expects to switch on the taps in the coming weeks at its pilot CTG plant in North China's Inner Mongolia Autonomous Region to deliver an initial 4 million cubic meters of gas each day to Beijing.

The project was ready for operation in July last year, but construction of the last leg of a 430-kilometre pipeline being built by a unit of State energy giant PetroChina has taken longer than expected.

"PetroChina's delay in building the pipeline is the main reason for the project delay," said the industry official, adding that Datang has already built the portion of the pipeline from the plant in Inner Mongolia to the border of Beijing.

PetroChina, China's top oil and gas producer, is the main operator of the country's 53,000 kilometers of pipelines that connect gas fields to the main consumption centers.

While the central government sets pipeline transmission fees, PetroChina has a big say in whose gas gets delivered into the trunklines first at what price, which has been a source of complaint among smaller, newer gas producers such as coal-bed methane explorers. A PetroChina press official was unable to provide immediate comment.

The Datang plant, costing a total of around 25.7 billion yuan (\\$4.22 billion) according to Xinhua News Agency, is the first of four CTG pilot projects the central government has approved that are expected to supply 15 billion cubic meters (bcm) of natural gas a year by 2015, around 7 percent of China's gas demand expected for that year.

The government has over the past few weeks called for boosting gas supplies, including from new suppliers like Datang, as demand for the fuel rose faster than expected.

Beijing is expected to see gas use hit a record 80 million cubic meters per day during the peak heating period in the coming winter months, the government said.

Datang is already building the second phase of the Inner Mongolia plant, and expects to start operation in the third quarter of 2014, the company has said.

A following third-stage investment will boost total capacity at the plant to 4 bcm per year in 2015.