Why China’s Putting All Its Oil Pipes in One Company

Chinese President Xi Jinping has a plan to help meet the country’s growing energy needs and clear its dirty air: Spin off the tens of thousands of miles of pipelines held by three state-owned oil and gas giants and merge them into one new company. After multiple delays, the company’s launch was officially announced in December. The resulting firm, China Oil & Gas Pipeline Group Co., will aim to attract private investors to help expand the $70 billion network and diversify energy supply. Such an overhaul would radically reshape China’s energy sector, although it still leaves control in a single pair of hands.

Almost all developed markets separate oil and gas production from transport to promote a level playing field and encourage new entrants into the market. An independent company also would be more likely, in theory, to decide on new routes based on national need rather than what serves an individual producer. More broadly, it’s part of Xi’s strategy to enhance national energy security by encouraging domestic exploration and multiple sources of supply by ensuring open access to pipeline transport.