China National Petroleum Corp. (CNPC), the country's largest natural gas producer, commenced construction of the 3rd West-East Gas Pipeline (WEP III) on Tuesday, the official Xinhua news agency reported the same day.

The state-owned major broke ground on the RMB 116 billion ($18.19 billion) cross-country pipeline in western China's Xinjiang Uyghur Autonomous Region and in Fujian Province on the eastern seaboard simultaneously, according to the report.

The pipeline is the third phase of CNPC's sprawling WEP network, and will have total transmission capacity of 30 billion cubic meters per year (bcm/y). The pipeline will source 25 bcm/y of supply from Central Asia and 5 bcm/y from coal-to-gas projects in Xinjiang, the report said.

Central Asian gas is expected to play an important role in helping Chinese suppliers sate booming domestic demand for the fuel. "We forecast that China will have around 50 bcm of gas demand in 2020 that needs to be satisfied by additional imports and Central Asian gas could play a key role is meeting this demand," Stephen O'Rourke, senior gas supply analyst for research consultants Wood Mackenzie, said last week.

With a total length of 7,680 kilometers, WEP III will begin in Khorgas City in Xinjiang and thread through the provinces of Gansu, Shaanxi, Henan, Hubei, Hunan and Jiangxi, before terminating at Fuzhou City in Fujian.

CNPC expects to finish building the line by the end of 2013, Wang Xiaoping, vice president of PetroChina West-East Gas Pipeline & Marketing Co., said in November last year at an industry summit in Beijing.

Trial operations at a segment of the pipeline, running between Khorgas and Urumqi in Xinjiang, are slated to start by the end of this year, state media reported in July.

The project is one of the largest in China to have secured private capital. The Urban Infrastructure Facilities Investment Fund, a domestic private investment vehicle established by the All-China Federation of Industry and Commerce, agreed to invest RMB 10 billion ($1.57 billion) for a 16 percent interest in May.

The National Council For Social Security Fund, China's state pension fund, and state-owned steel giant Baosteel Group also acquired stakes of 16 percent in exchange for RMB 10 billion ($1.57 billion). CNPC holds a controlling 52 percent interest.