CNPC to Open Xinjiang Oilfields to Private Investment

China National Petroleum Corp plans to open some of its oilfields in Xinjiang in the country's northwest to private investment, reports the Guangzhou-based 21st Century Business Herald.

The state-run CNPC is hoping the private investment will be the first step toward the government allowing the market to decide the price of natural gas and petroleum, as the company has found itself in the red due to fixed prices.

Potential investors need expertise in the industry and must be willing to take risks, since petroleum exploration is a field of high risk and high gains, said Li Li, an energy analyst.

China's cabinet made a statement encouraging private participation in energy projects after a meeting on May 23. Shortly thereafter, CNPC announced investments by state-run steel company Baosteel and other shareholders in three petroleum pipelines.

In 2011, CNPC imported 15.5 billion cubic meters of natural gas from central Asia and incurred 20 billion yuan (US$3.2 billion) in losses. In 2012, the red ink will continue to bleed, as it plans to import 24.1 billion cubic meters of natural gas. For petroleum products, CNPC suffered staggering losses of 60 billion yuan (US$9.5 billion) in 2011.

One analyst said that by opening part of its oilfields to external investment, CNPC can ask the central government to allow price increases on its products, alleviating its losses. (WantChinaTimes, Edited by Topco)