China's Changing Energy Market: Asset Sales and Security Risks

PetroChina to Sell Pipelines Worth $6.3 Billion as Controls Ease

PetroChina Co. (857), operator of the country’s largest pipeline network, will sell assets valued at 39 billion yuan ($6.3 billion) as the government continues with steps to open state-owned enterprises to private investment.

The company will transfer to a separate unit assets including the First and Second West-East Gas Pipelines, which carry natural gas from central Asian countries and the energy-rich province of Xinjiang to China’s eastern cities, according to a statement to the Hong Kong stock exchange today. The unit will be sold at a public tender on an equity exchange.

President Xi Jinping is pushing the most aggressive moves in more than a decade to increase market forces in the economy. The sale is the first step after Chairman Zhou Jiping said in March PetroChina is considering opening up areas including pipelines, oil and gas exploration and refining to private investment.

No surprise that among the first SOE targeted for "market forces" is an industry and firm dominated by Xi's political enemies.

One Chinese view: The Partition of State Owned Assets Begins.

Naturally the asset sales begin with PetroChina and some people say the time to get rich quick is here. Some say this is a fair deal, but do these two words exist in China?

Elsewhere: China's Energy Security Faces Unprecdented Internal and External Threats

In one way China faces the same threat as the United States: oil resources are increasingly falling under the control of foreign governments, which is why there is a push for nuclear power.

Latest findings Safety Research Center for Strategic and International Institute of International Relations 6, 2009 shows that in the new international political and economic situation, China's energy security is facing unprecedented "foreign aggression" and "internal problems."

　　"China's dependence on foreign oil continues to rise, and most of them in high-risk areas." Strategy and Director of the International Center for Security Studies Institute of International Relations, said Liu Hui, China imports oil from the Middle East and Africa accounted for Chinese oil more than 80% of total imports, most of these countries and regions unstable political, economic, and the situation is more stable countries has long been carved up Western companies.

　　According to the above titled "China's National Security Intelligence Report (2014)" (the "Report"), in recent years, the United States and other Western countries by former world dominated by the big oil companies ranked 20, monopolized the world's proven quality 81% of oil reserves, China is difficult to find opportunities for the company, only to enter the high-risk areas.

　　"China's right to speak less and less on international oil prices, costs of oil imports are also increasing." State Council Development Research Center researcher 王亦楠 said.

　　"Report" introduced the Strait of Hormuz and the Strait of Malacca in the Middle East and Africa, the only way for oil exports, but China is completely controlled by others in the two straits safe route.

　　Iran nuclear crisis escalated in late 2011, the US-Iraqi cooperation in maritime rattling, Iran has repeatedly threatened to blockade the Strait of Hormuz. Once put into action, from the Middle East to China's oil transport lines will be completely cut off.

　　Malacca Strait situation is not optimistic, not only is one of the world's most important pirate strategic channel U.S. control, it is very dangerous sensitive area. A more serious problem is that about 80 percent of China's energy imports subject to the Malacca Strait, a narrow waterway here, easily blocked.

　　王亦楠 on the "First Financial Daily" correspondent said that although the 2006 opening of the China-Kazakhstan oil pipeline, 2011 opening of the China-Russia oil pipeline and the 2013 opening of the China-Myanmar oil pipeline strengthened China from Central Asia, Northeast Asia and offshore oil import safety, but these passages China's total oil imports accounted for only less than 20%, Chinese offshore oil transport safety problems have not been fundamentally resolved, maintaining unobstructed sea throat urgent need to further enhance the strength.

　　China's energy security "internal problems" mainly on the lingering haze.

　　2013 severe haze pollution swept through half of China, involving the range of 1.6 million square kilometers, several provinces haze frequently issued a red alert, air quality has reached six serious pollution in the "most advanced." Haze pollution is severe consequences in the coal-dominated energy structure, extensive economic accumulated over several decades of development.

　　Deputy director of the International Center for Strategic and Security Studies Institute of International Relations 赵晓春 said, "haze" warning us that the traditional "oil security as the core" energy security can not meet the actual needs of the strategic thinking of China's energy development, energy security is not just International diplomacy checks and balances the interests of the game problem, it is the domestic economic restructuring, the maintenance of public health and the urgent need to enhance the quality of life.

　　The report said that China's energy security, "external" Another big problem is the Chinese situation in the international climate negotiations will be more passive.

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　　Wang Yinan introduced in recent years, "shale gas revolution" led to a significant decline in U.S. natural gas prices, the proportion of coal has dropped below 40%, coal gas and electricity accounted for more than just around the corner, U.S. greenhouse gas emissions will drop substantially. "Shale gas revolution" has greatly increased the U.S. initiative on climate negotiations, Obama changed the attitude of President Bush's tough, began to emphasize to undertake emission reduction obligations.

　　Emily said the United States make a positive change in China naturally become the focus of international emission reduction in this global struggle between the protagonist and environmentalists worldwide criticism.

　　China's GDP is much lower than the U.S., but in 2008 it has surpassed the U.S. as the world's greenhouse gas emissions, "champion", but the upward trend continues.

　　王亦楠 said, in response to international criticism of China's society, our country has stressed that with "compare per capita carbon emissions" and "cumulative carbon emissions more" to fight for the right to equitable development. But in recent years, China's per capita carbon emissions has exceeded the world average, from 1990 if counting China's cumulative carbon emissions have gone beyond all countries except the United States.

　　Wang Yinan believe that fundamental change does not occur if China's energy structure, the situation in the international climate negotiations will be more passive.