PetroChina, China's biggest energy producer, will divest a 50 percent stake in Trans-Asia Gas Pipeline Co. to a unit of China Reform Holdings Corp., another state-owned company that acts as an investment firm charged with revamping government-run entities.

Trans-Asia Gas Pipeline operates a 1,830 kilometer (1,140 mile) system that carries gas through Turkmenistan, Uzbekistan and Kazakhstan to China’s far western province Xinjiang.

Selling its stake in pipelines is part of a broader reform underway in China to help facilitate private ownership of underperforming state-run entities, which the government believes will make them more efficient. It is also a response to Petro China's lower turnover this year due to the present day low-price oil environment.

China's President Xi is pushing to overhaul a bloated $16 trillion government sector as the world’s second-largest economy heads for its slowest growth in a quarter-century. The government is looking at stripping its biggest energy companies of their oil and gas pipelines as part of the reforms that would see the assets spun off into independent businesses, people with knowledge of the plans said.