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    Reform Is in the Pipelines: PipeChina and the Restructuring of China’s Natural Gas Market [GGP]

Summary

Beijing launched the most ambitious reform of China’s oil and natural gas industry in more than two decades with the establishment of the China Oil & Gas Piping Network Corporation (PipeChina) last December.

by: Columbia | SIPA

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Complimentary, Natural Gas & LNG News, Asia/Oceania, Global Gas Perspectives, Insights, China

Reform Is in the Pipelines: PipeChina and the Restructuring of China’s Natural Gas Market [GGP]

The company is being developed from midstream assets—pipelines, liquified natural gas (LNG) import terminals, and storage facilities—and personnel transferred from China’s national oil companies (NOCs).

Beijing expects that its goals of increasing China’s domestic and imported natural gas supplies and consumption will be more effectively advanced by having China’s midstream infrastructure owned and operated by a single company that provides fair and open access to its pipelines, LNG import terminals, and storage facilities instead of by three NOCs reluctant to grant third-party access to infrastructure.

The specific objectives Beijing intends for PipeChina to further include:

  • Growing China’s natural gas output by expanding the number of companies involved in the upstream (exploration and production)
  • Reducing natural gas prices and increasing natural gas use by creating a more competitive downstream (processing, sales and distribution)
  • Developing a unified national pipeline network to more efficiently distribute natural gas around the country

If PipeChina delivers these outcomes—which depends, in part, on the enforcement of third-party access rules—there is likely to be an increasing number of new participants in China’s natural gas markets, especially LNG importers, which in turn should create new opportunities for LNG exporters.

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