Guangdong's plans to establish a unified natural gas network throughout the province are being threatened by stalled negotiations with PetroChina.
The country's largest oil and gas producer has been in talks to invest in the company that will take charge of Guangdong's natural gas pipeline construction and distribution but has been unable to agree on the shareholding structure.
The impasse could affect the timetable for sales of natural gas from northwest China and Central Asia to Guangdong through the second west-east pipeline to be completed by PetroChina in 2011.
It could also prompt PetroChina and its downstream distributor partners to circumvent the provincial network and build their own infrastructure to connect the main pipeline to users in Guangdong cities.
This would scupper the provincial government's plans to put gas procurement, sales and distribution in the hands of one company - Guangdong Natural Gas Pipeline - said an official from the Guangdong Oil & Gas Association.
The Guangdong government first invited all three state oil and gas producers to co-invest in Guangdong Natural Gas two years ago.
China National Offshore Oil Corp, the parent of listed CNOOC, took a 40 per cent stake and China Petrochemical Corp, the parent of listed Sinopec Corp, 30 per cent. The remainder is held by provincial government-owned power generator Guangdong Yuedian Group.