Zhejiang to Consolidate Provincial Gas Grid for COGNPC Era
On February 10 Zhejiang Provincial Development and Reform Committee and Provincial Energy Administration published the Key Points for the Energy Sector Structural Reform of Zhejiang in 2020, pledging to consolidate the unique provincial gas grid so as to separate the transmission and sales and establish a transparent and fair natural gas market environment.
Zhejiang Province has forged up a very unique, independent and separated natural gas grid since 2004’s first natural input via CNPC’s WEP I. By now, the input sources are expanded to CNPC WEP II, Sinopec Sichuan-East, CNOOC offshore gas and Ningbo Terminal, but all the sources are gathered together and under the sole control of Zhejiang Energy Group in the midstream and downstream. The market in Zhejiang is controlled by Zhejiang Energy Group’s two subsidiaries, the wholly-owned Natural Gas Pipeline Company in the southern developing area and the JV Zhejiang Natural Gas Development Company in the northern developed area.
The JV is controlled by Zhejiang Energy Group by 40% stakes, and CNPC and Sinopec hold 30% respectively. After the establishment of COGNPC, CNPC and Sinopec will hand over assets in the natural gas pipeline sector, and with 60% stakes, COGNPC will become the holder of the JV, and the unique provincial grid is about to be broke.
In aware of this situation, Zhejiang provincial government issued the provincial natural gas reform opinion in last year’s October, two months earlier than the establishment of COGNPC, in order to consolidate and reorganize the two natural gas companies, and join the COGNPC as the sole provincial natural gas company at the midstream, while remain independent and unified in the downstream continuously. The shaping of COGNPC is still undergoing, and it is too early to say the future of the merger of COGNPC and Zhejiang gas grid, but Zhejiang, as well as other peers like Guangdong and Shaanxi, has stepped in advance for a better position in the future natural gas reform and development.
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