Signs of an Imminent Opening up of the Chinese Oil and Gas Industry

Published Date : Feb 25, 2014

The Chinese oil and gas sector has traditionally been the bastion of state-owned companies. But this situation is likely to change soon given the fact that there are a number of initiatives being taken to open up this sector to private companies. This seems imminent following an announcement by the China Petrochemical Corp that it has plans to open the sector to the inflow of more private capital in the near future. As part of this initiative, the China Petrochemical Corp\'s will first open up around 30% of its retail business arm to private entities.

Guangzheng Group, a private player in the steel sector in China said on Friday that it had entered into a cooperation agreement with the China Petrochemical Corp that is also commonly known as Sinopec. As part of this agreement, the two companies will jointly develop a business focused on natural gas in the western part of the autonomous region of Xinjiang Uygur.

The statement by Guangzheng Group stated that the strategic cooperation will see the two players jointly developing downstream gas markets in five different areas in China. These include: Hotan, Bayingolin, Aksu, Kashgar, and Kezhou which are all located in southern Xinjiang.

It was as recently as last week that Sinopec has said that it would welcome investments from private players, especially for a project that involves a 30% investment in its retail oil business arm. This business sector of Sinopec comprises over 30,000 fuel pumps, storage facilities, and pipelines across China. 

In addition to opening up its business private players, Sinopec is also apparently considering introducing private capital in a larger portfolio of sectors.