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Third Party Access for China's Pipeline Network

Third Party Access for China's Pipeline Network (zhuda / Shutterstock)

After years of deliberation, China's nationally owned pipelines will be operated by third parties in the foreseeable future, according to media reports.

"We have been talking about open and fair pipeline access for a long time, and the detailed plans will likely be released soon. For those who have the capability to give access but decline to do so, there will be punishment," said a source familiar with the matter.

The country's three state-owned companies -- China National Petroleum Corporation, China Petrochemical Corporation and China National Offshore Oil Corporation -- have up to now had complete control over the pipeline infrastructure. The new policies are intended to improve efficiency in the sector. This is in line with most of the world's other major economies, which over the past several decades have fundamentally shifted toward greater market orientation.

The new policies also encourages midstream pipeline owners to split gas sales from pipeline business for more efficient allocation of resources. By separating the pipeline business from sales, policymakers believe more social capital will go towards the construction of pipelines, and allow upstream and downstream participants more access to the infrastructure.

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