CHINA announced yesterday the establishment of a national oil and gas pipeline company in a move intended to boost competition, Xinhua said.

The long-awaited State pipeline company aims to provide other investors fair market access to infrastructure that is mainly controlled by China’s three national oil companies, Xinhua said yesterday.

The move marks a “key step” in China’s efforts to deepen reforms of its oil and gas sector, Xinhua said.

The government will merge the networks operated by its three State-owned giants under a single company, an important step toward removing barriers that have hampered domestic production, and which dovetails with efforts to use more gas instead of coal.

“The new company will separate oil and gas transportation, production and sales, and open transportation to third-party entities, which will benefit market competition,” said Xinhua, quoting an unidentified official at the newly launched pipeline company.

The new entity is expected to manage most of the country’s pipeline infrastructure, controlled by energy giants China National Petroleum Corp. (CNPC), Sinopec and CNOOC, and some underground natural gas storage, as well as a few liquefied natural gas terminals.

As of end-2018, CNPC owned 63 percent of China’s mainstream oil and gas pipelines, while Sinopec and CNOOC controlled 31 percent and 6 percent, respectively.

In a separate report yesterday, Xinhua said the new entity is expected be overseen by the State-owned Assets Supervision and Administration Commission, which will have a 40 percent share in the new entity.

Quoting an unidentified industry insider, Xinhua reported the three energy giants will share the remaining ownership, with CNPC holding 30 percent, Sinopec 20 percent and CNOOC 10 percent.

The pipeline company’s creation has been considered since at least 2014 and is part of government drive to streamline industrial capacity among State-owned enterprises. The government is seeking to spur wider natural gas distribution and upstream exploration by shifting ownership from competing producers into a single operator, which can make decisions based on overall national energy needs.

The reform is also designed to help smaller private or foreign firms, which have found access to infrastructure blocked or prohibitively expensive. With the assets stripped from the hands of the big three State firms, other companies can gain access and move supply to where it’s needed.(SD-Agencies)