Reuters: China considers pipeline reform to boost gas supply

As China struggles to rid cities of choking smog, one of the early priorities for Beijing's economic reforms will likely be to force state-run PetroChina to allow private producers fair access to natural gas pipelines.

Without fair access to the distribution network, independent producers have no incentive to develop the country's vast gas reserves to their full potential. Already the world's fourth-largest gas user, China's leaders want to boost domestic output to accelerate the substitution of cleaner-burning gas for coal to fuel power and heating.

They included gas price reform and some curbs on the role of state monopolies in their boldest reforms in decades unveiled last week. Industry experts say both are needed to maximise gas output and ease annual winter supply crunches that have slowed the switch from coal in power plants and forced authorities to ration industrial gas use.

China's largest oil-and-gas producer, PetroChina, built and runs nearly three quarters of the 54,000-km natural gas pipeline system across China. It controls most of the large, long-distance trunk lines that pipe gas from far-flung fields to fast-growing cities. Other state energy firms - Sinopec and CNOOC - run the remaining trunk pipelines but are much smaller operators compared to PetroChina.

Some independent gas producers say PetroChina has imposed unfair conditions on them for access to the grid, erasing the profit-incentive for boosting output, and others are asking the state giant for better access. MORE