The Economist Intelligence Unit: CNPC's West-East gas pipeline sale

China National Petroleum Corp (CNPC), China’s largest hydrocarbons producer and pipeline operator, revealed this week that it intends to sell the eastern section of the two-line West-East gas pipeline. The route, which transports Central Asian supplies to China’s coastal regions, is fully owned by the state behemoth. CNPC will inject all the eastern assets into a new subsidiary, then market its whole stake to outside investors. The assets are worth between Rmb29bn and Rmb39bn (US$4.7bn-6.3bn), CNPC said on May 12th.

The move is part of a government push to lure more private capital into state-dominated sectors, encouraging "mixed ownership" with the aim of making state-owned enterprises more efficient. (Large state-owned corporations are criticised for using national resources wastefully and acting in their own—rather than the national—interest.) This is part of a wider effort, unveiled in November at the third plenum of the Chinese Communist Party, to give the market a “decisive role” in the economy.

Opening up of the state-dominated oil and gas sector has since gathered a degree of momentum. Plans for public-sector reform were clarified somewhat in April. In February China’s second-biggest player, China Petroleum and Chemical Corp (Sinopec), announced plans to allow private investors, pension funds and the like to buy up to 30% of its distribution networks. At pains to show it, too, is falling into line, CNPC’s listed subsidiary PetroChina has made promises of its own, including that it would cut its enormous spending again in 2014 (it fell by 10% last year). MORE