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January 3, 2003
Dept. of International Cooperation, CEInet
New Hot Spot of Foreign Investment
According to Catalogue of Guide for Foreign Invested Industries jointly released by State Development Planning Commission and other sectors in March 2002, in fuel gas and heating power industry, except major pipe network construction controlled by government and state-owned enterprises, gas resource, the other network construction of heating power resource will be opened to individuals, enterprises and foreign investors (but as for the construction, management of fuel gas pipe network in medium and large-sized cities should be controlled by Chinese side). Through the intensive market competition, the construction of urban fuel gas and heating power will be speeded up, so the enterprises in the field will be benefited, which will play a positive role in the development of Chinese natural gas industry.
Due to the characteristics of the management of fuel gas pipelines, it is undoubtedly that the fuel gas in cities has huge market potential.
Natural Gas Transport Projects in China
As early as the planning period of west-to-east pipeline project, some foreign enterprises have made positive reaction to Chinese flue gas supply market, especially those from Hong Kong.
Though China strictly controlled foreign capital¡¯s entry into social public service areas before, the ¡°flexible¡± capitals from Hong Kong still enter the market. Due to their early accession, they have benefit a lot.
HK & CHINA GAS (00003 HK), Panva Gas Holdings Ltd. (08132 HK), Xinao Gas Holdings Limited (02688 HK), Wah Sang Gas Holdings Limited (08035 HK) enter domestic fuel gas pipe networks by stock controlling, purchase and joint stock.
Some heavy weight fuel gas companies, like GAZ DE FRANCE, concentrate on capitals of China¡¯s large provinces.
Domestic listed companies, like SHENERGY CO., LTD. and XINJIANG GUANGHUI STONE CO., LTD also enter the fuel gas pipeline field.
Companies who Plan to Invest in China Domestic Fuel Gas Market
In July 2002, the west-to-east pipeline project officially started. The places along the pipelines are key of foreign investment, especially lower reaches of Yangtze River.
Because the urban gas pipelines are controlled by local governments and their subordinate companies, so the gas suppliers in upper reaches usually face the problem of ¡° the last km¡±. Before the starting work of west-to-east pipeline projects, some adventurous investors had already arrange the market. For instance, Panva Gas Holdings Ltd. has already signed contracts with fuel gas sectors in many cities of Yangtze river basin and set up over ten companies.
It is estimated that in 2005 the gas from Russia will begin to enter Chinese market. According to the information from related sectors, China will receive 20 billion cubic meters and will be stable in 30 years.
It is said that the market of Russian gas market will cover China¡¯s Northeast region and North China, and even South Korea and Japan. The gas from Russia is rich in reserves, good in quality and with cheap price, so the price of the end users will be with RMB 2 yuan. (Table 3)
The inside experts deem that in case the agreement of cooperation among Russia, China, Japan and Korea is signed successfully, the fuel gas industry in Northeast China and North China will be a new hot spot of investment.
on Current Prices of Fuel Gas Supplied in Chinese Market
Table 4 Part of home listed gas companies
Yi Yang, Natural Gas Market: Competition between Sino and Foreign Capitals in China, ¡°China¡¯s Petroleum and Petrochemistry¡± No. 10, 2002