By HOU Ruining

“Three Barrels" (CNOOC, PetroChina and Sinopec) companies will form the first phase of the core of the National Petroleum Pipeline Network, created toward the end of last year, and include three liquefied natural gas (LNG) companies and one gas storage company. The rest are pipeline companies.

An inside source told Jiemian News that further Three Barrels assets would be included as they became ready.

The three LNG companies are Sinopec’s Beihai LNG, and CNOOC’s Yuedong and Tianjin LNG operations.

Sinopec runs the Beihai LNG terminal, along with Shandong Qingdao and Tianjin receiving stations.

CNOOC is the largest LNG importer in China and the largest oil company with LNG receiving stations. Yuedong and Tianjin have unloading capacities of 2 million tons per year and 3 million tons per year respectively.

PetroChina's LNG receiving station has not been included. Instead, LNG receiving stations affiliated to CNPC have been injected into Kunlun Energy, listed in Hong Kong.

The position of CNOOC and Sinopec equity is relatively clear, with all shareholders in the mainland, so asset transfer is relatively simple. If Kunlun Energy assets are to be transferred to the National Pipeline Network, the deal must be evaluated in accordance with Hong Kong standards, and the approval of major small and medium shareholders must be obtained. The transfer could therefore take much longer.

The throughput of the network’s LNG receiving stations is small - only 8 million tons per year – but accounts for about 10 percent of current domestic capacity.

Sinopec Zhongyuan Gas Storage Co., Ltd. will also become a national pipeline company. Zhongyuan is responsible for the Wen 23 underground gas storage facility in Henan Province.

Wen 23 can store over 10 billion cubic meters of gas and is the largest facility of its kind in eastern China, with the greatest storage capacity and the highest working gas volume. A key project of the National Development and Reform Commission’s 13th five-year plan, Wen 23 guarantees the smooth operation of long-distance arteries such as the Yuji, Zhongkai, and E'ancang pipelines.

Other "Three Barrels" companies involved include the West-East, China-Myanmar, and Sichuan-East pipelines.