China to Sell $9.45b Stakes in Gas Pipeline

China to Sell $9.45b Stakes in Gas Pipeline

China Petroleum & Chemical Corporation (Sinopec), the second-largest oil and gas group in the country, plans to sell 50% of its premium Sichuan-East China natural gas pipeline business to investors, Reuters reported. Sinopec did not specify the timeline for the completion of the sale, neither a value of the target assets. The company will use Sichuan-to-East China Gas Pipeline Co. “as a platform to introduce capital publicly,” and will continue holding 50% equity interest in the unit after the sale, wrote Bloomberg.

The step comes in line with the country’s reform plan aiming for a boost to infrastructure investments in cleaner fuel. Sinopec’s plan is similar to that of its larger domestic rival PetroChina that had announced the sale scheme in January 2016, according industry experts. This was a prelude to Beijing’s reform package targeting different sectors of the oil and gas industry.

Previously, Sinopec said it spent $9.45b to build the pipeline that runs 2,200 km from the southwestern province of Sichuan, a top gas producing basin, to Shanghai on the east coast. The line came into operation in 2010 and carries 12bcm of natural gas, the equivalent to 6% of the country’s annual gas consumption.

Meanwhile, China boasts 90,000 km of gas grids which presents less than 20% the size of the distribution system in the US, but it is still not sufficient for the country’s needs as one of the world’s largest energy consumers, according to Oil Price. This has created a major bottleneck that limits consumption of gas, even though this has halved the greenhouse gas emissions of coal, China’s biggest energy source.

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