China’s Factory Province First to Join New State-Owned Giant’s Gas Network

What’s new: The southern Chinese province of Guangdong has become the first province to merge its gas pipeline into the newly formed PipeChina, which aims to stimulate gas consumption by consolidating pipeline assets across the country with the aim of bringing down costs to customers.

The Guangdong government signed the gas grid contract with PipeChina on Thursday, turning its state-owned provincial-level gas pipeline company, which operates some 619 kilometers of trunk gas pipelines, into one of PipeChina’s 20 subsidiaries.

What’s the context: China’s latest state-owned infrastructure titan PipeChina, formally the China Oil & Gas Pipeline Network Corp., is at the center of a major structural reform of the country’s energy sector. The reform seeks to open the pipeline business to third-party players and create a level playing field in terms of competition to encourage investment as well as increasing the efficiency of energy distribution.

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Guangdong province consumed the second most natural gas in China last year, with annual consumption reaching 25.1 billion cubic meters.

Though Guangdong’s consumption volume is high, the distribution of pipeline assets is uneven, with most being built in the relatively developed Pearl River Delta region, said Che Xiaobo, a researcher at a energy consulting firm.

Quick Takes are condensed versions of China-related stories for fast news you can use.To read the full Caixin article in Chinese, click here.

Contact reporter Lu Yutong (yutonglu@caixin.com) and editor Marcus Ryder (marcusryder@caixin.com)

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