China to push for reform on oil and gas pipeline operations

BEIJING -- China will take measures to encourage fair and open access to the country's oil and gas pipelines as part reform to increase efficiency in the sector, according to a media report.

Policies will be rolled out to allow third-party access to pipelines operated mainly by the country's three state-owned oil giants, Xinhua-run Economic Information Daily reported Tuesday.

"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.

These measures will be in line with a guideline released in May this year on reforming the oil and gas industry, which listed eight tasks covering the upstream to downstream sectors.

While allowing private companies to take part in upstream oil-gas exploitation, the guideline also encourages midstream pipeline owners to split gas sales from pipeline business for more efficient allocation of resources.

The country's oil and gas pipelines are mainly operated by the country's three state-owned companies: China National Petroleum Corporation, China Petrochemical Corporation and China National Offshore Oil Corporation, which together own about 98 percent of pipelines.

Analysts have said that the overly concentrated ownership could lead to market inefficiencies, resulting in unreasonably high prices for end users.

By separating the pipeline business from sales, the guideline is likely to bring more social capital to the construction of pipelines, and allow upstream and downstream participants more access to the infrastructure, Essence Securities said in a note.