On the "China Gas Summit 2005" held yesterday, the National Development and Reform Commission's Energy Bureau deputy director Wu Guihui indicated that China would fully open its natural gas industry to the world.

Wu revealed that the entire industry chain, including upper-stream exploitation, midstream pipeline construction and downstream market, of the natural gas industry will open up and encourage foreign investment. Adhering to the principle of "based on domestic market while appropriately inviting offshore resources," China will import natural gas moderately.

China's natural gas industry owns a limited amount of cooperative projects with foreign investors. At present besides PetroChina and Shell's jointly exploitation in Changbei gas field, Shell and Unocal have retreated from the East Sea natural gas project. Shell, Exxon Mobil and Russia's Gazprom also gave up the west-to-east gas transmission project.

Wu also mentioned that the Chinese government has started legislative preparations for petroleum and natural gas law which, together with industrial policies for the natural gas industry, will help regulate natural gas price and taxation as well as industrial surveillance.

During the process of opening up, the current situation of three domestic petrol giants exploiting natural gas on either side of the coastline is likely to be altered. Li Liang from Sinopec's east sea & west lake natural gas company said that China is seeing rapid growth in natural gas demands. The government has considered urging PetroChina and Sinopec to exploit natural gas at sea in order to increase output and reduce the potential tension between supply and demand.

(Xinhua News Agency December 1, 2005)