China’s New State Oil & Pipeline Company Heralds Major Energy Reform

China has officially launched a new state-owned oil and gas pipeline company – China Oil & Gas Piping Network Corp.– in an effort to revamp the country’s oil and gas pipeline sector.

Here Soorya Tejomoortula, oil and gas analyst at GlobalData, a leading data and analytics company, offers some insight and thoughts on the potential energy reform that will take place.

The formation of a national pipeline company is another step to provide stimulus to the country’s slowing economy. The new pipeline company, which has been planned since 2014, will drive investments to the oil and gas pipelines sector by providing fair access to infrastructure for all companies.

The new company effectively brings all pipelines of China National Petroleum Corporation (CNPC), China Petrochemical Corporation (Sinopec Group) and China National Offshore Oil Corporation (CNOOC) under one umbrella. The new entity will also control some underground gas storage sites and a few regasification terminals as well. As a result, it will become one of the major oil and gas companies in China, and ensures adequate supply of oil and gas with improved efficiency.

The creation of new company is also part of larger energy reforms initiated by China. The new company will improve market competition by unbundling oil and gas production, transportation and sales, and will open up oil and gas transportation sector to non-government companies. Currently, CNPC controls 50% of active (operational) major transmission pipelines in China. China Oil & Gas Piping Network Corp ends CNPC’s market dominance in the country!

The new company will also provide further momentum to China’s coal-to-gas policy by catering to the growing natural gas demand through new gas pipeline infrastructure. Also, exploration and production of natural gas will receive further fillip as more companies will have equitable and fair access to transportation pipelines.

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