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China plans new state pipeline company in massive energy reshuffle

[SINGAPORE] China will announce a plan this year to form a national oil and gas pipeline group combining the long-distance pipeline assets of the country's state-owned energy companies, in the sector's largest reshuffle in two decades, said three persons with knowledge of the plan.

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 biggest impact from the changes will fall on PetroChina, which controls 70 per cent of China's oil pipelines and nearly 80 per cent of the major gas pipelines.

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 is unclear when Beijing will officially announce the plan or when the new firm will be launched, but companies have been making preparations for the move, said a second source, an executive at a state-owned oil company. That includes PetroChina relocating its pipeline segment's management team to a separate office tower in Beijing, the source said.

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The sources declined to be named due to the sensitive nature of the matter.

The NDRC did not respond to Reuters request for comment.

"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.


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