Chinese pipeline reform set to spur E&P

The transfer of major infrastructure assets away from the country’s NOCs to the newly created PipeChina should reinvigorate the upstream sector

China’s pipeline reform will be a boon for domestic E&P in coming years as it will allow the country’s NOCs to sharpen their upstream focus while paving the way for the entry of more players to ­foster competition. The reform, initiated last month, saw PetroChina and Sinopec agree to swap various assets—including pipelines, storage sites and import terminals worth a combined RMB391bn ($56bn)—for cash and shares in a new midstream operator, known as PipeChina. Those deals, plus cash injections from other investors, will see PipeChina valued at RMB500bn once the transactions close by the end of September—making the state-owned firm one of the largest pipeline companies in the world. The as