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Despite a slight delay, Chinese national pipeline
company—China Oil and Gas Pipeline Network Corporation
(PipeChina)—officially started operation following the asset
transfer on 30 September 2020. The first round of asset transfer
from the three national oil companies covered the majority of
China's midstream infrastructure, including nine LNG terminals,
three underground gas storage facilities, and transmission gas
pipelines totaling almost 50,000 km and 240 Bcm annual capacity.
PipeChina also took over the national oil companies' existing
shares in more than a dozen of provincial gas grids. Negotiations
are still ongoing for other key midstream assets, such as those
under PetroChina's subsidiary, Kunlun Energy.
In less than two months since its operation, PipeChina has
implemented third-party access (TPA) to its assets. The first-batch
third-party registration opened between 10 and 20 October, during
which PipeChina reportedly received applications from over 1,000
entities. Through November, TPA has been granted at least twice on
the West East Pipeline system and three times on LNG
terminals—the Yuedong, Shenzhen Diefu, and Hainan LNG
terminals. A contributing reason that TPA is still limited is that
PipeChina's short-term focus is on maintaining a smooth transition
and avoiding supply disruption, now that the winter heating season
is here. In fact, keeping some spare capacity for emergency use is
coming handy to receive cargoes originally intended for the Beihai
LNG terminal which has suspended operation due to a fire accident
in early November.
In the short term, PipeChina is taking over the tasks of
continuing midstream construction, maintenance, operation, and
research. As TPA implementation improves, there will be new
business opportunities for market participants. In fact, PipeChina
plans to establish a unified control platform and a capacity
trading platform to accommodate more TPA, although no details are
available yet. The company's long-term goal is to achieve full
national gas grid coverage by 2025 and full grid coverage down to
the county level by 2035.
