En­ergy spinoff

China Na­tional Petroleum Corp will splits its nat­u­ral gas sales and pipe­line units, a move ex­pected to fur­ther ac­cel­er­ate nat­u­ral gas in­dus­try re­form.

China Daily (USA) - - FRONT PAGE - By ZHENG XIN zhengxin@chi­nadaily.com.cn

China Na­tional Petroleum Corp will split its nat­u­ral gas sales and pipe­line units, a move which will fur­ther ac­cel­er­ate nat­u­ral gas in­dus­try re­form and pro­mote a mar­ket­based pric­ing sys­tem for the sec­tor.

The newly sep­a­rated pipe­line com­pany will be re­spon­si­ble for all pipe­line-re­lated operations, while the cor­po­ra­tion will es­tab­lish five in­di­vid­ual nat­u­ral gas sales com­pa­nies.

The pipe­line unit of the oil and nat­u­ral gas ma­jor was pre­vi­ously re­spon­si­ble for both nat­u­ral gas pipe­line op­er­a­tion and sales.

Xu Wen­rong, vice-pres­i­dent of CNPC, said the move is sig­nif­i­cant in ac­cel­er­at­ing mar­ket re­form in the nat­u­ral gas sec­tor.

An an­a­lyst also said the spinoff of the nat­u­ral gas pipe­line operations and sales business will move the com­pany in the direc­tion of a more sub­di­vided nat­u­ral gas sales or­ga­ni­za­tion and let the mar­ket play a de­ci­sive role in re­source al­lo­ca­tion.

Ac­cord­ing to Sun Yang, an an­a­lyst from Zhongyu Coun­sel, a coun­sel­ing agency in the fields of coal, steel, oil and nat­u­ral gas, the sep­a­ra­tion of nat­u­ral gas sales and pipe­line units will help speed up mar­ket re­form in the nat­u­ral gas sec­tor and help for­mu­late mar­ket-ori­ented prices for clean en­ergy.

The com­pany re­cently raised non-res­i­den­tial nat­u­ral gas prices in the coun­try’s north­ern re­gions, to help man­age peak de­mand dur­ing a win­ter ex­pected to be the cold­est in four years.

It raised prices by 10 per­cent in Shan­dong province, and gas prices were also in­creased in the north­east to deal with a “very tight sup­ply” in the peak win­ter pe­riod.

The State-owned com­pany said ear­lier that it would in­crease in­vest­ment in nat­u­ral gas pipe­line con­struc­tion and gas sales in the com­ing decade.

The com­pany, Asia’s big­gest oil and gas pro­ducer, cur­rently al­lo­cates 70 per­cent of its to­tal bud­get to nat­u­ral gas production and around 10 per­cent to gas pipe­line con­struc­tion. It is ex­pected to in­crease th­ese fig­ures as it fo­cuses more ef­fort on its gas business, said Hou Qi­jun, head of CNPC’s plan­ning department.

Hou said the firm would ex­pand its an­nual gas out­put to 180 bil­lion cu­bic me­ters by 2020 from the cur­rent ca­pac­ity of 120 bil­lion cu m.

Petro China Co Ltd, CNPC’s listed arm, said its prof­its from nat­u­ral gas and pipe­lines slumped nearly 36 per­cent to 4.7 bil­lion yuan ($703 mil­lion) in the first four months of 2016.

The 2050 en­ergy out­look re­port, re­leased by CNPC’s re­search in­sti­tute, shows that China’s nat­u­ral gas use will surge to 510 bil­lion cu m by 2030 and 710 bil­lion cu m by 2050.

WANG BO / XIN­HUA

Work­ers re­place a pres­sure me­ter at the nat­u­ral gas pipe­line of China Na­tional Petroleum Corp in the Qaidam Basin in Qing­hai province.

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