Great article, and thanks for it!

I agree with your statement that China's having billions of dollars is meaningless in terms of their ability to achieve a transnational pipeline, absent all the other factors needed to secure a deal.

But there's several cases of pipeline construction inside China that have surprised seasoned international gas folks with their sheer "infeasibility", but were constructed nonetheless.

Take for example the first Shaanxi-Beijing pipeline of 3 bcm. It was built by the Chinese in order to displace coal usage in Beijing and attempt to clean the air up prior to the Olympics next year. They did everything wrong. They built the pipeline before the market was developed and enough apartments were reticulated to take the gas. They built the pipeline before they had underground storage to deal with peak and off peak demand. They priced it at what was then a very high price (about $6.50/MMBTU), which everyone said is not the way to start a nascent gas market. It was considered a boondoggle, but it is now fully loaded, and a second 12 bcm pipeline has been added to it. They basically learned how to build and run a pipeline into a market like this by doing it.

The most well-known example is the West-East pipeline, a 5,000 km, 12 bcm, $15 billion pipeline that would have never been built anywhere else in the world. It's undersized, the resource base in Xinjiang is doubtfully sufficient, transport costs are high, and thus the gas coming out in Shanghai is relatively expensive. All the proposed foreign partners--Shell, Exxon, Gazprom--eventually pulled out of the deal (actually, CNPC never wanted them in the first place, but were forced by the previous prime minister to have "international cooperation"). International experts said it would never be built, but it was built, finished ahead of schedule, and fully subscribed. It didn't accord to international standards of financing, etc., but it did have several important benefits to the Chinese. It kickstarted the high-quality steel pipe market for the domestic iron & steel industry, it engaged them with international companies on standard practices and expectations, it developed a cadre of gas pipeline construction engineers, it unlocked the gas resources of Xinjiang for eastern use. And now China is beginning a second West-East pipeline of 30 bcm, in anticipation of something coming in from either Western Siberia, Turkmen, or Kazakhstan. Personally, I think the Turkmen-Kazakh connection is more likely than the Altai-China connection from Russia, since Turkmen is giving CNPC exploration and development rights upstream, which is China's preferred mode of operation. Ultimately, however, until the Chinese accept that a large market doesn't provide them with a discount price on imported gas, then, as you note, none of their international projects will come to fruition, no matter how oddly they run their domestic system.