China National Petroleum Corp (CNPC), the country’s largest state-owned energy company, has launched a national power company to buy and sell electricity at lower prices, building on Beijing’s push to liberalize the country’s energy markets.
The new company, China Petroleum Electric Energy Company Ltd (CPEEC), is being established from CNPC’s Daqing Oilfield Electricity Power Group, CNPC said in a statement Tuesday on its Wechat account.
The Daqing Group provides power for oil drilling and refineries in the Daqing oil field, China’s largest, as well as some local commercial and residential homes in the northeastern province of Heilongjiang, where the field is located.
CPEEC will mainly source electricity from the wholesale market for CNPC and eventually also sell power to outside customers, said a manager at the newly formed company’s Hebei branch.
He said CNPC consumes up to 60 billion kilowatt hours (kWh) each year. That is equivalent to the amount of energy Qatar and Denmark combined combined in 2014. He declined to be identified because he is not authorized to speak to the media.
CNPC did not respond to requests for comment on the new unit’s business plans.
With a registered capital of 5 billion yuan (US$754.03 million), CPEEC will inherit Daqing’s existing corporate network and two coal-fired power plants, with an annual power generation capacity of 8.6 billion kWh. The company plans to build new natural gas-fired power plants and deploy distributed energy stations, CNPC said.
CPEEC unifies different regional units that CNPC created to exercise market power in some provinces that have launched energy trading platforms. The National Development and Reform Commission approved the platforms in 13 provinces and the city of Beijing over the past year.
More regional power sales companies will be created in the future, probably one in Guangdong province,” the source said.
The Heilongjiang power market has traded 8.669 million kWh since its launch and prices have averaged 0.049 yuan per kWh less than prices set by the local government, according to data on the provincial government website.
In October, CPEEC’s Guangxi branch signed a contract to purchase power in the monthly and long-term power markets for CNPC’s Guangxi subsidiary in 2018, CNPC said on its website.