“The Belt and Road Initiative” (hereinafter the “B&R”) is now speeding up and stepping towards detailed implementation. It is learnt by journalist from the Economic Information Daily that, as the “highlight” of foreign cooperation, specialized planning on the energy sector has been drafted at the stage of seeking for public opinions and improvement. Based on current thought, oil and gas cooperation will focus on six key fields, including “four cooperative zones” and “six industrial regions”, to establish and improve the transaction center for oil and natural gas, open up new sea-and-rail transportation line, construct oil & gas mainline in Asia, create a series of first-class international oil & gas enterprises, and enhance energy equipment manufacturing and “going out” of energy service enterprises.
Since the issuance of Vision and Mission on Jointly Promoting and Constructing the Silk Road Economic Belt and the 21st-Century Maritime Silk Road, the central government has built up a leading team to promote the “B&R” and study the deployment and development. Currently, China’s 31 provinces have almost finished the connecting work with the “B&R” construction and implementation scheme of Xinjiang Production and Construction Corps, with a series of key energy resources cooperative project initiated for construction.
Meanwhile, most of departments are formulating their own implementation schemes to initiate the preparation work for a series of specialized planning. National Energy Administration expressly held a meeting in May to implement the promotion work for international cooperation on energy under the “B&R”, and further specify the details. Current method is to continuously deepen the exploration and development for traditional energy resources, such as coal, oil & gas, metal, mine and etc., positively enhance the cooperation on clean and renewable energy, including hydro-electricity, nuclear power, wind electricity and solar energy, boost the cooperation for nearby processing and conversion of energy resources, and form an industrial chain of upstream and downstream integration for energy resources cooperation.
The upstream industrial chain should insist to simultaneously develop oil and gas in main regions of Central Asia-Russia, the Middle East, Africa and Latin America; and the downstream should focus on creating and building up the bases of oil refining and chemical engineering, technology research and development as well as equipment manufacturing in the nations full of resources and consumptions.
Key deployments should be laid in China’s western region, Kazakhstan in Central Asia, Gwadar Port of Pakistan, Middle East, Russian Far East and Southeast Asia region to form six large industrial regions.
One person involved in international energy cooperation told the reporter.
The focus of midstream cooperation is the connectivity of oil and gas pipelines. The construction of Asian oil and gas pipeline artery will propel the formation of regional pipeline network. The key project is linking crude oil pipelines between China and Central Asia and Russia, which may significantly improve the transport of China’s land-link of crude oil import. Meanwhile, gas pipeline network construction is another important mission, including gas pipelines connecting northeastern China and eastern Russia, Central Asia gas producing countries and South Asia consuming countries, and pipe line connecting Mideast and Southeastern Asia which crossing a few countries.
In terms of seaways, in addition to the safety construction of traditional channels such as Strait of Malacca, more sea-land transportation lines should be created. In the future, the routes will be further diversified through the opening of multiple channels.
“The establishment and improvement of oil and gas trading centers are also major tasks in implementing the “Belt and Road” initiatives. The Shanghai International Energy Exchange (SIEX) is a very good example in respect of crude oil future. Xinjiang Autonomous Region and southwestern China may establish the same platform in the future, which will contribute to the formation regional markets and prices. Meanwhile, China should working together with surrounding countries to speed up the construction of regional oil and gas financial market and creation of Asian oil and gas trading system. These are the solutions for oil and gas premium that has existed for long, and may reduce the cost of oil and gas trade to the greatest extent,” the said person told the reporter.
In the construction of oil and gas trading centers, more participants should be allowed to enter the oil financial market. Restrictions should be relaxed for domestic enterprises to trade on oil derivatives market. And foreign investors should be introduced to the market, especially foreign hedgers. At the same time, perfect regulatory system should be built for the financial market, including formulating reasonable trading rules applicable to East Asia, standardizing derivative market and constrain violations, to reduce risks of exchanges and investors.
In addition, leveraging the advancement of the “Belt and Road” strategy, traditional central oil companies should started to plan multinational strategy and built themselves into world-class oil and gas companies. Besides, some major energy projects will provide huge opportunities for energy think- tanks, energy equipment manufacturers, energy service providers and construction companies to deploy international operation.
Translated by Jelly Yi & Adam Zhang
Latest comments