China launches state-owned oil and gas enterprise to manage main pipelines

China’s pipelines are expected to need to handle 2.5 times the current gas demand by 2040

China has launched a new state-owned oil and gas enterprise to manage investment, construction and interconnection of its main oil and gas pipelines, in efforts to bolster the role of gas in the country’s energy mix.

The new company will take over the majority of pipeline infrastructure currently controlled by China National Petroleum Corp (CNPC), Sinopec and CNOOC in addition to an unspecified number of underground natural gas storage and liquefied natural gas terminals.

The formation of the company is said to be part of a national drive intended to “boost competition” by improving the allocation efficiency of the supply of oil and gas resources.

According to consultancy Wood Mackenzie, China’s pipelines, which already run at maximum capacity during peak seasons, are expected to need to handle 2.5 times the current gas demand by 2040.

This comes one week after the Assets Supervision and Administration Commission of the State Council (SASAC) revealed a plan to cut coal production by 25-30 per cent in North-West China.

So far the lack of infrastructure has slowed down the Chinese government’s attempts to swap out coal heating for gas across the north-east region.

What is your sentiment on Natural Gas?

6.264
Bullish
or
Bearish
Vote to see community's results!

According to Wood Mackenzie analyst Max Petrov, the most significant impact of the company’s launch will be to lower gas pricing in the long term.

The company will be overseen by SASAC, which will hold a 40 per cent share of the ownership. The remaining ownership will be controlled by China’s three energy giants, CNPC (30 per cent), Sinopec (20 per cent) and CNOOC (10 per cent).

FURTHER READING: China issues plan to tackle air pollution

FURTHER READING: Russia and China launch joint natural gas pipeline

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
iPhone Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image