Beijing's bold move to allow foreigners to take control of a key gas pipeline project is seen as a sign for further relaxation of energy-sector regulation, industry officials and analysts say.
On Wednesday, Beijing announced it would allow foreign investors a majority share in the 40 billion yuan (about HK$37.4 billion) West-East Gas Pipeline project to bring natural gas to Shanghai from Xinjiang.
Officials and analysts expect the move to pave the way for the removal this year of a ban on foreign participation in pipeline gas distribution in urban areas.
In 1996, Beijing curbed foreign participation in the distribution of energy, including electricity and gas distribution. The latest development is part of the country's attempts to speed up urban development, according to Alfred Chan Wing-kin, managing director of Hong Kong & China Gas.
He expected the sector's liberalisation to take place this year, with foreign companies being permitted to build up stakes in gas-supply projects. They would ultimately be able to take controlling stakes in these projects rather than taking control in one go.
HSBC Securities head of regional utilities research Joseph Jacobelli expects there will be some limitation on ownership in the sector.
'There could be a cap on the ownership as in many other Asian countries.' Energy is one of the most sensitive areas in which Beijing is making efforts to relax its control.