China to Open Oil-gas Exploration, Development to Private, Foreign Capital

　

All private, foreign-funded enterprises or other businesses registered within China with net assets of 300 million yuan are eligible for oil and gas mining rights, announced China’s Ministry of Natural Resources at a news conference on January 9. 

 

China has been pacing up reform in the oil and gas sector, especially in 2019, commentator Bian Ji wrote for The Beijing News. After loosening restrictions on foreign-funded gas station gains, the country changed the approval process for foreign-cooperated oil and gas projects in March 2019 and lifted restrictions on foreign-funded business involvement in oil and gas exploitation in July 2019.　

　

In a guideline document published on December 22, 2019, the central government proposed to support private enterprises in oil and gas exploration, development, refining and sales. The guideline document was implemented in less than a month, a move that demonstrates China’s resolve of reform, Bian said.　

　

Previous reform measures saw China’s domestic refined oil prices in line with international oil prices. With the reform, supply and demand will increasingly affect prices, as there are more alternative sources of supply, Bian predicted. The measures would bring better quality and more diversified oil and gas services to the public with greater price competitiveness, he added.

　

State-owned enterprises tightly control China’s domestic oil and gas exploration and development. Lack of market competition leads to low efficiency and hamstrings progress in overall reforms in the field, Bian wrote. China’s energy consumption, especially natural gas, has been increasing, which requires further opening of the upstream sector.　

　

Oil and gas exploration and development require large capital input and have a high technology threshold. The commentator proposed that authorities roll out more detailed rules to level the playing field and avoid protectionism.