(Yicai Global) Jan. 20 –China will approve market-based transfers of mining rights between oil and gas producers, aiming to create an oil and gas exploration and production system dominated by large state-owned corporates, but supplemented by various types of non-state-owned entities, under a new five-year plan covering the period 2016-2020 published by the Chinese National Development and Reform Commission (NDRC) on Jan. 17.
The NDRC encourages qualified oil and gas producers to diversify equity by introducing different types of equity investments. Furthermore, restructuring of specialized businesses such as engineering technology, construction and equipment manufacturing among state-owned oil and gas producers will be pushed forward, enabling them to compete in the market as independent players.
China will also build about 5,000 kilometers of crude oil pipelines and 12,000 kilometers of refined oil pipelines in the 2016-2020 period, extending the total length of crude oil pipelines to 32,000 kilometers by 2020, and refined oil pipelines to 33,000 kilometers.
By 2020, oil production in China will be around 200 million tons, equivalent to 4 million barrels per day (bpd), down from 215 million tons in the previous five-year plan, representing a 7 percent drop. The new five-year plan also envisions establishment of a diversified oil supply security system under market conditions.
Oil consumption in China, the world's second largest oil consumer, will be maintained at around 590 million tons in 2020, and the overall natural gas supply capacity will be increased to over 360 billion cubic meters, representing almost two-thirds increase in a sign that the nation's policy-makers prioritize natural gas use.
At present, the Chinese oil and gas market is still dominated by two major state-owned enterprises, PetroChina Co. [NYSE:PTR] and China Petroleum and Chemical Corp. (CPCC), also known as Sinopec.