China seeks influx of private, domestic oil investment

China’s energy sector is mostly comprised of government-owned firms. Of late, however, it is urging inflow of more investments from private domestic groups. Apparently, it’s a strategy to hasten oil exploration and power generation within the country

The Ministry of Land and Resources disclosed that private firms will be urged to invest in oil exploration and natural gas projects within China, and that the area of focus will include shale gas as well as coal-bed methane development.

On the other hand, the State Electricity Regulatory Commission stated that government and private firms will be granted equal opportunity to invest in its power generation sector, including distribution, building, and design.

It further assured that both public and non-public firms will be covered by the same rules on pricing, and that the country will strive to regulate and implement these rules with transparency.

The two pronouncements made by China’s agencies are actually part of its campaign to promote competition among players in the energy, infrastructure, and transportation sectors. On June 5, the nation’s National Development and Reform Commission disclosed that it will bare its policy programs outlining investor guidelines regarding their entry into these industries. As of now, these sectors are mostly controlled by state-owned companies.

According China Center for Energy Economics Research Director Lin Boqiang, the country is taking giant leaps towards breaking government control of its resources, to a certain extent. Private sectors who are investing in oil and gas businesses could drive government counterparts to speed up oil discovery; otherwise, they would be left lagging behind or, worse, out of the picture.

A month ago, China’s Resource Ministry said that it will soon hold another round of bids for shale-gas exploration in the region and, in keeping with its program it will likewise open the auction to private domestic firms.

Although the country is known to have the largest deposits of shale gas, it sadly lacks the technology to unleash it and produce commercial-grade fuel.

China also aims to have a clearer appreciation of its geological make-up.

Lin, however, commented that the state should start the ball rolling and immediately issue the said policies and programs so prospective investors are already made aware of what to expect.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

Facebook Twitter LinkedIn Google+ YouTube