China announced it will form a national oil and gas pipeline company combining the long-distance pipeline assets of the country’s state-owned energy companies, in the sector’s largest reshuffle in two decades.

The change is designed to open access to China’s pipeline infrastructure to private and foreign energy producers as a way to spur oil and gas exploration. The open pipeline network will allow companies to focus on exploration without any additional costs to move the fuel to market.

China’s economic planner, the National Development and Reform Commission (NDRC), approved the plan for the group last month, including details of assets to be incorporated, and final approval from China’s State Council is still pending, said one of the sources.

The initiative is considered the biggest energy market reshuffle since 1998 when Beijing restructured the entire sector and established China Petroleum and Chemical Corp (Sinopec) and PetroChina.

The new entity will effectively become a fourth state-controlled energy company next to Sinopec, China National Petroleum Corp, the parent company of PetroChina, and China National Offshore Oil Corp.

It is unclear when Beijing will officially announce the plan or when the new firm will be launched, but companies have been making preparations for the move, said a second source, an executive at a state-owned oil company. That includes PetroChina relocating its pipeline segment’s management team to a separate office tower in Beijing, the source said.

“It’s the largest-ever step in (the oil and gas) sector reform. At the core of it, it’s about removing a key bottleneck in the market and allowing producers and consumers equal access to infrastructures,” said Dong Xiucheng, director of energy policy research at University of International Business and Economics in Beijing.

China is the world’s second-largest oil consumer and third-largest natural gas user, but its 133,000-km (82,600 miles) long-distance oil and gas pipeline network is less than one- fifth the size of the system in the United States, the world’s biggest oil and gas consumer.

The plan will mainly impact Petrochina, which controls 70 percent of China’s oil pipelines and nearly 80 percent of the major gas pipelines. In 2017, the company reported monthly revenue of 3.6 billion ($537.93 million) yuan from its main pipeline operations.

Beijing started considering reforming the pipeline sector nearly a decade ago but NDRC finally formulated plans in 2017 while examining China’s natural gas system as part of its plan to replace coal with gas.

The new reform plan also includes crude oil and refined product pipelines, said two of the sources. This will address access concerns for China’s independent oil refiners and fuel dealers.

The main contents are quoted from Chen Aizhu’ reporting and some sensitive information is deleted during release.

Event Forecast

Beijing International Exhibition on Equipment of Pipeline and Oil & Gas Storage and Transportation (CIPE), a regular gathering in oil & gas industry, has been held simultaneously with China International Petroleum & Petrochemical Technology and Equipment Exhibition (cippe) in March successfully for 19 sessions.

CIPE 2020 welcomes an attendance of 15 international pavilions, including USA, Germany, UK, France, Canada, Denmark, Italy and Russia etc. The well-known global exhibitors like Transneft, GE, TMK, NOV, TRAPIL,Honeywell, Rockwell, ESAB, Castolin-Eutectic, Atmos, BAUER, HEMPEL, Akzo Nobel, Sandmayer, Tatasteel,Bohler, etc., all participate in the event.

CIPE 2020 also attracts famous domestic enterprises such as CNPC Pavilion, SINOPEC Pavilion, CNOOC Pavilion, Baosteel, PCK, Tisco, ZSSW, TYHI, YiDa, XINYEGANG,HWI,JINGLEI, MA STEEL, Jiuli, NANFANG pump, XINXING pipes, SHENYANG BLOWER, FURUN, China Petroleum Pipeline, etc.

All the exhibitors and visitors will meet hundreds of purchasing delegations around the world, such as Saudi Aramco , NIOC, Exxonmobil, BP, Shell, Total, Conocophillips, Chevron, Gazprom, Petrobras, CNPC, SINOPEC, CNOOC, CNPC Oversees project department, China Petroleum Pipeline Bureau, Sinotrans, Purchasing department of the General Logistics Department of PLA.

The 20th Beijing International Exhibition on Equipment of Pipeline and Oil & Gas Storage and Transportation (CIPE) will be held on March 26-28, 2020 at New China International Exhibition Center, Beijing. Welcome to join us! More information, you can browse the official website http://www.cipe.com.cn/en/.