Investment ‘welcome’ in oil and gas
Official: LNG terminals, pipelines among projects to be opened further
The government will encourage private-sector investment in liquefied natural gas terminals and oil and gas storage and distribution facilities, a senior official at the National Energy Administration said on Thursday. Liu Deshun, director-general of the department of oil and gas at the nation’s top energy planner, said that there is “huge potential” for growth in infrastructure for oil and gas storage and distribution.
“If you look at the demand for natural gas in China, the building of facilities (for) storage and distribution is far from enough,” he said. “Compared with developed markets such as the United States, we are still at an early stage.”
Liu made the comments at a newsconferencein Beijingheld by the National Development and Reform Commission.
China has built 120,000 kilometers of onshore oil and gas pipelines, excluding those in the oilfields. These pipelines form the backbone of the oil and gas market, Liu said.
Natural gas has become an important option in the world’s largest energy consumer, and it plays a vital role in optimizing the energy mix. Earlier this year, Russia and China signed a $400 billion deal for the construction of a pipeline that will supply 30 billion cubic meters of natural gas a year to China.
Natural gas consumption in China stood at 167.6 billion cu m in 2013, up 13.9 percent year-on-year, while natural gas imports rose 25 percent.
With huge amounts of local government debt and mounting pressure to stabilize economic growth, the State growth rate of China’s natural gas consumption in 2013 from
a year earlier length of the country’s onshore oil and gas pipelines, excluding
those in oilfields Council, China’s cabinet, is rolling out measures to drawmore private capital into public-sector projects. The steps it has approved include reducing barriers to entry in some markets and using the public-privatepartnership investment model.
Li Pumin, a spokesman for the NDRC, said during the news conference that the private investment model will focus on seven fields including transportation, water conservation, municipal infrastructure and energy facilities.
He said that such steps will help dismantle domestic monopolies and establish sound, dynamic markets.
But Sun Hongzhan, an analyst at Minsheng Securities Co Ltd, said many private firms that have invested heavily in the public sector often struggle to reach equal status with their State-owned counterparts.
“Public sectors such as infrastructure construction can’t be completely opened to the private sector, because someof them exist for the public good and their value can’t be set by the market,” he said.
And in some other fields, such as the capital-intensive nuclear industry, fewprivatesector companies have the necessary financial or other resources to participate, Sun said.
Chinamaymerge its two biggest nuclear power companies as it bids to compete for contracts in overseas markets, three industry officials familiar with the situation said on Thursday.
Plans have already been submitted to the StateOwnedAssets Supervision andAdministrationCommission tomerge China National NuclearCorp with China General NuclearPowerCorp, saidXuLianyi, a former government official and industry consultant.
The two companieswere deliberately set up as rivals to compete for projects in China and abroad. But under government prompting, they have cooperated on a single reactor brand, Hualong I, with the intention of eventually marketing it abroad.
“The merger between CGNandCNNCis inevitable,” saidXu.
He said the proposals had received strong backing fromthe government.
Xu nowserves as a senior expert at State Nuclear PowerTechnologyCorp, a company that builds and develops third-generation nuclear technology, including the United States-based Westinghouse Electric Corp’s AP1000reactor.
Xu confirmed that the SASACis also reviewing another merger involving SNPTCand one of the country’s big five electricity generators— China Power InvestmentCorp.
Officials with the SASAC andCNNCsaid theywere not aware of the merger. CGNwas not immediately available for comment.
Last year, CNNCand CGNmade a joint bid to takeastakeof upto40 percent in a reactor project at Britain’s Hinkley Point.
The firstHualong I reactor is expected to be approved for construction soon, with local media reports saying itwould be built in Fujian province.
Two other nuclear company officials confirmed the mergerproposals on Thursday, with one saying that it was “ridiculous” that the companies should be competing with one another for overseas reactor projects.