BEIJING, May 31: State-owned China National Petroleum Corp (CNPC) has for the first time accepted outside investment in its gas business in response to government calls to open energy and other infrastructure projects to private investors.
Chinese firms have long been effectively shunned from industries such as energy, banking, telecom and railways but Premier Wen Jiabao has been keen to open these sectors to private investment.
The parent of PetroChina on Wednesday signed an agreement with several state and private investors to co-fund the third West-to-East gas pipeline that would take central Asian gas to China’s southeastern coast.
‘CNPC has made an audacious innovation in the business mode of the third West-to-East gas pipeline by introducing outside investors, changing the previous method of funding all projects itself,’ the top Chinese oil and gas producer said in a press release.
It did not elaborate on the investment structure.
The project would cost 116 billion yuan ($18.25 billion) and CNPC would contribute 32.5 billion yuan, or 52 percent of registered capital, to the yet-to-be-established joint venture, the China Securities Journal reported on Thursday.
The National Social Security Fund, Urban Infrastructure Industry Fund and Baosteel Group each will contribute 10 billion yuan, the newspaper said.
The National Social Security Fund is a state pension fund, and Urban Infrastructure Industry Fund was launched in March by the All-China Federation of Industry and Commerce, a lobby group for private businesses.
Baosteel Group is the parent of Baoshan Iron & Steel and China’s third biggest mill by production.
The third cross-country gas pipeline, including one trunk line and eight branches, will span more than 5,000 km from the northwestern boarder in Xinjiang to coastal Fuzhou, capital of Fujian province in the southeast, and have transportation capacity of 30 billion cubic metres (bcm) per year, the same as the second line that was put in use in late 2009.
CNPC’s first West-to-East pipeline has an annual capacity of 17 bcm.
Jiang Jiemin, chairman of both CNPC and PetroChina, said last week that the construction of the third pipeline will be completed in two to three years.
CNPC’s oil and gas businesses are mainly operated by PetroChina.
($1 = 6.3577 Chinese yuan)
(agencies)
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