Xi Jinping Confirmed to Found NPC

Xi Jinping Confirmed to Found NPC

According to the Xinhua News Agency, President Xi Jinping chaired the seventh meeting of the Central Committee for Comprehensively Deepening Reform and made an important speech. Eight documents were deliberated and approved by the Committee on the meeting, including the Implementation Opinions on Petroleum and Natural Gas Pipeline Operating Mechanism Reform.

The Committee insisted that to deepen the petroleum and natural gas pipeline operating mechanism reform, the marketization reform was of vital importance. To found the National Pipeline Company (NPC) controlled by the state and invested by multiple kinds of investors would be a key step to form an oil and gas market system with many resource channels, a unified and efficient transportation system and a fully competitive end market. Thus, the efficiency of oil and gas resource allocation will be improved, and the stable oil and supply will be ensured.

Experts from NDRC Price Monitoring Centre believe that the foundation of NPC will be the most important measure in the natural gas industry reform and will affect China’s present gas market system deeply.

Now the exploitation and production of natural gas in China are controlled by the NOCs and Xinjiang Guanghui Group, an international large-scale private enterprise which bases in Xinjiang Province. The import of PNG is decided by the geopolitics. With the increasing gas demand, China is relying on the LNG import more and more. In 2018, China’s total natural gas supply was 288.24 bcm, in which the LNG import volume was 74.86 bcm, taking up 25.97%. More enterprises could import LNG or even PNG after the foundation of NPC. The size of China’s gas supply depends on three indicators, the pipeline, environmental policies and the price. NPC could improve in both aspects of the pipeline and the price. The gas infrastructure status is now dragged by the low level of interconnection and the lack of pipelines. From 2015 to 2018, the transportation capacity of China’s natural gas pipeline increased at an annual growth of 5.9%, which was lower than the aim of 10.2% in the 13th Five-Year Plan. With rational earnings, more social capital could be attracted to the gas infrastructure, and the construction and improvement of the natural gas infrastructure may accelerate.

The central government has released multiple signals to the foundation of NPC. The press reported on January 24 that NDRC had approved the foundation plan and submitted to the superior. On March 5, NEA published the Petroleum and Natural Gas Industry Planning and Management Measures (2019 version), which included the international and the domestic long-distance pipelines into the national petroleum and natural gas planning. On March 9, Xiao Yaqing, the director of State Council’s SASAC (State-owned Assets Supervision and Administration Commission), said on the second session of the 13th National People’s Congress that SASAC would focus on the oil and gas market system reform in 2019 via the foundation of NPC. Sources closed to NDRC told us that the reform would not be too radical in 2019: At step 1, NPC would focus on integrating the major long-distance pipelines, which means the state-level pipeline. The integration of the provincial pipelines and city-level ones will be left to be finished gradually in the future. Guangdong and Zhejiang have already formed the united provincial pipeline since 2001, and some other provinces have also started such trails. Their experience may inspire the NDRC and NPC.

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