New petroleum firm expected to break monopoly

As China is likely to create a giant oil and gas pipeline company this year as part of the nation’s effort to reform the State-owned petroleum industry, insiders believe the move will shake up the petroleum sector and break the monopoly in the oil and gas sector.

The new oil and gas pipeline company, which is likely to be established around the middle of this year, according to China Securities Journal, will operate in a market-oriented manner after the acquisition of the related assets of the country’s three national oil companies — China National Petroleum Corp (CNPC), China Petroleum and Chemical Corp (Sinopec) and China National Offshore Oil Corp (CNOOC).

The companies have a combined asset value of up to 500 billion yuan ($75 billion), according to Bloomberg.

Li Jin, chief researcher at the China Enterprise Research Institute, said the establishment of a new pipeline company is part of the nation’s oil and gas reform. Other fields including oil and gas exploration might see new moves as well.

Na Min, a senior analyst for oil and gas at Bloomberg New Energy Finance, said the government has been trying to overcome obstacles facing the industry for years.

“As an independent entity, the new pipeline company is expected to attract social investment and speed up the construction of the pipeline network, while granting third party access to incentivize the upstream investment and further unlocking resource potential,” she said.

Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University, said that setting up the pipeline company is a trend and only a matter of time.

According to China Securities Journal, China National Petroleum Corp, the nation’s largest oil and gas producer by annual domestic output, has the biggest percentage of oil and gas pipelines in the country, with domestic oil and gas pipelines reaching 85,582 kilometers, including 20,359 km of crude pipelines, 68.9 percent of the national total and 53,834 km of gas pipelines, 76.2 percent of the country’s total.