CHINA Gas Holdings Ltd (stock code: 384), a city gas distributor that's targeting a fourfold gain in sales by 2008, said it will invest in a 400 million yuan (US$52 million) long-distance natural gas pipeline in northern China's Inner Mongolia to transport fuel to meet rising demand.

The operator of 61 mainland gas projects has the right to take as much as 85 percent of a 230-kilometer pipeline from the Sulige gas field to the city of Erdos in Inner Mongolia, the company said yesterday in a statement. Sulige is China's largest gas field in operation.

China Gas, which plans to add as many as eight projects this year, is taking advantage of China's push to use more cleaner-burning fuels to cut pollution and reduce its reliance on coal and oil. China wants gas to account for 5.3 percent of total energy consumption by 2010 from about three percent now.

"The project will not only help improve the group's cash flow and bring lucrative rewards to the shareholders but will also give the group a steady supply of natural gas for improving competitiveness in the downstream market," China Gas said in the statement.

The Chang Meng pipeline is due to start construction in July and can carry 1.2 billion cubic meters of gas when commercial operation starts in the middle of next year, China Gas said.

China Gas may sell 400 million cubic meters of gas this year, compared with 176 million cubic meters in 2006, Chief Financial Officer Eric Leung said in March, according to Bloomberg News. Sales in 2008 may reach as much as 800 million cubic meters, he said.