Mega investment: China plans a $78 billion state owned natural gas company

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Mega investment: China plans a $78 billion state owned natural gas company

Mon, 06/18/2018 - 08:49
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Mega-investment: China plans a $78 billion state owned natural gas company (chuyuss / Shutterstock)
Mega-investment: China plans a $78 billion state owned natural gas company (chuyuss / Shutterstock)

China is seeking to revise ownership of its huge gas pipeline network due to the fact that more and more private and industrial customers convert from coal to gas.

For several years China has been investigating the merger of the oil and gas pipeline assets of three of its state energy giants: China National Petroleum Corporation (CNPC), China Petrochemical Corporation (Sinopec) and China National Offshore Oil Corporation (CNOOC).

The regulators are aiming to announce a decision before winter to mix the pipeline assets of the three companies, which have an estimated value of about $78 billion.

The Chinese government plans that both state and private funds invest capital in the new gas pipeline giants to reduce the combined share of the three mentioned energy giants to around 50 percent. An IPO is not excluded.

These plans could change, but the creation of a gas pipeline giant would be a fundamental overhaul of the Chinese gas market, as it would open the gas network to other suppliers besides the current owners of the pipelines. The so-called third-party access could help smaller gas producers to acquire available capacities on the pipeline network. It is currently difficult for independent producers to gain access to the network of their huge state competitors.

Analysts estimate the length of the Chinese gas pipeline network at 70,000 kilometers. The three state energy giants currently own 66,000 kilometers of it.

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