context: As expected, this round of reforms will touch the entire oil and gas industrial chain. Mining rights will be a key area to watch next, as it is also dominated by major oil and gas companies. Opening upstream will invite more investment in exploration and drive an increase in production.

The plan to set up a national oil and gas pipeline company has been approved by National Development and Reform Commission and is expected to be released in the first half of 2019, confirmed Economic Information Daily, a news outlet managed by Xinhua. According to the article, China National Petroleum Corporation, Sinopec and China National Offshore Oil Corporation will spin off their pipeline assets to form the new company. Social capital, including government-backed investment funds and private capital will be introduced to control a stake of around 50 percent. A 19 Dec 2018 report by Sinopec Economic Development Research Institute said newly injected social capital will be used to fund new pipeline projects. The new pipeline will also seek IPO approval.

Luo Zuoxian 罗佐县 Sinopec Economic Development Research Institute vice director says the pipeline company will help

  • separate gas transmission and sales
  • improve interconnection of gas pipelines
  • open up basic infrastructure
  • improve oil and gas resource allocation
  • better implement pipeline transmission cost verification, which will help bring down transmission costs

Along with the new pipeline company, the government will introduce measures to reform pipeline operation, as well as oil and gas exploration and mining. China International Capital Corporation expects oil and gas producers will increase exploration expenditure, given state calls to boost production and storage.