OREANDA-NEWS. November 22, 2013. The status quo in China whereby three state-run companies possess their own oil and gas pipelines and thus control transportation services is likely to change since the country's National Energy Administration began a feasibility study to open the piped gas sector to third-party market players.

It is expected that the planned new policy will be enforced from Jan. 1, 2014, Shanghai's National Business Daily reported.

Market sources familiar with the issue said the policy will break the long-term monopoly of the three state-owned enterprises — China National Petroleum Corp (CNPC), Sinopec and China National Offshore Oil Corp — on domestic oil pipe assets, of which CNPC alone controls 70%.

However, in the face of the reality that the construction of oil pipe networks is a highly expensive venture, it will be challenging for any company wanting to take over oil and gas pipeline operations to build new pipeline networks, the sources said. They anticipated that despite the implementation of the new policy, no oil pipe assets are likely to be privatized in the short term.

Dong Xiucheng, vice president of the School of Business Administration at China University of Petroleum, said that at present the pipeline networks are controlled by separate enterprises which only transport the oil and gas their own company sells and do not share pipelines with each other.

If one business wanted to transport oil and gas to a place where they have no pipelines but others have, it would have to build its own, Dong said, calling the situation a waste of resources. Therefore, he added, it is necessary for the authorities to take measures to open the market.