China launches multi-billion-dollar oil & gas pipeline company
Beijing announced on Monday the establishment of a national oil and gas pipeline firm, which will combine most of the country’s energy infrastructure and will provide fair market access to investors.
According to consultancy group Wood Mackenzie, the new firm may be worth between $80 billion and $105 billion.
“The new company will separate [oil and gas] transportation, production and sales, and open [transportation] to third-party entities, which will benefit market competition,” Xinhua News Agency reported, citing an unidentified official.
It will merge the networks operated by China’s three state-owned giants – China National Petroleum Corporation (CNPC), Sinopec and CNOOC – under a single operator.
As of end-2018, CNPC owned 63 percent of China’s mainstream oil and gas pipelines, while Sinopec and CNOOC controlled 31 percent and six percent, respectively.
The company will be responsible for building and interconnecting oil and gas trunk pipelines, gas storage and peak shaving facilities, transporting crude oil, oil product and natural gas through the pipelines, as well as disclosing pipeline and storage capacity availability to third parties, and enabling them to apply for access.
According to Xinhua, the new entity is expected be overseen by the State-owned Assets Supervision and Administration Commission (SASAC), which will have a 40 percent share in the company. CNPC, Sinopec, and CNOOC will share the remaining ownership.
The new energy company, the formation of which has been under consideration since at least 2014, is part of President Xi Jinping’s drive to streamline industrial capacity among state-owned enterprises. It comes as part of China’s plans to double its pipeline infrastructure to over 240,000km by 2025.
Last week, Moscow and Beijing officially launched a mega pipeline called Power of Siberia (or the eastern route) to deliver Russian gas to China. It will then link up with China’s own network to deliver gas as far as the eastern seaboard and help satisfy the nation’s vast and growing energy needs. China is the world’s largest importer of oil and second-biggest buyer of natural gas.
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