CHINA is looking at stripping its biggest energy companies of their oil and gas pipelines, as part of sweeping industry reforms that would see the assets spun off into independent businesses, according to sources with knowledge of the plans.

    The National Development and Reform Commission (NDRC), the nation’s top economic planning agency, is leading talks on the initiative, according to the sources, who asked not to be named. The separation of the pipeline units would be part of President Xi Jinping’s reforms to allow markets a more decisive role in the economy.

    The NDRC has held talks since last year on the sale of the assets with the biggest pipeline owners and the utilities that buy most of the fuels, the sources said. A final decision on the plan or the number of companies to be created hasn’t been made.

    The assets could be worth as much as US$300 billion, according to an estimate by Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein.

    “China should push to strip out pipeline assets from oil companies and allow those facilities to run independently from explorers,” said Lin Boqiang, director at the Energy Economics Research Center at Xiamen University. “This is reform that China can do now.”

    China National Petroleum Corp. and its listed arm PetroChina Co. is the country’s biggest owner of pipelines, controlling about 77,000 kilometers. China Petrochemical Corp. and its listed unit China Petroleum & Chemical Corp., or Sinopec, are the next largest with more than 30,000 kilometers.

    Any cash from pipeline sales would benefit the companies as it could be re-channeled to more profitable upstream businesses, analysts said.

    (SD-Agencies)