April 2019, Vol. 246, No. 4

Global News

China Plans State Pipeline Company to Spur E&P

China is expected to introduce a plan this year to combine the long-distance pipeline assets of its state-owned energy companies into a single, national oil and gas pipeline group and open access to private and foreign energy producers.

The goal is to encourage oil and gas exploration by allowing companies to focus on exploration without any additional costs to move the fuel to market, three people with knowledge of the plan told Reuters.

China’s economic planner, the National Development and Reform Commission (NDRC), approved the plan for the group last month, including details of assets to be incorporated, and final approval from China’s State Council is still pending, said one of the sources. 

The initiative is considered the biggest energy market reshuffle since 1998 when Beijing restructured the entire sector and established China Petroleum and Chemical Corp (Sinopec) and PetroChina.

The new entity will effectively become a fourth state-controlled energy company next to Sinopec, China National Petroleum Corp, the parent company of PetroChina, and China National Offshore Oil Corp.

 “It’s the largest-ever step in (the oil and gas) sector reform. At the core of it, it’s about removing a key bottleneck in the market and allowing producers and consumers equal access to infrastructures,” said Dong Xiucheng, director of energy policy research at University of International Business and Economics in Beijing.

China is the world’s second-largest oil consumer and third-largest natural gas user, but its 82,600-mile (133,000-km) oil and gas pipeline network is less than one-fifth the size of the system in the United States, the world’s biggest oil and gas consumer.

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