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China opens up oil & gas exploration to foreign firms

China opens up oil & gas exploration to foreign firms
China's Ministry of Natural Resources said on Thursday that for the first time foreign companies will be allowed to take part in oil and gas exploration and production in the country.

According to the ministry, from May 1 foreign firms registered in China with net assets of not less than 300 million yuan ($43 million) will be eligible to obtain oil and gas mining rights. The change will also apply to domestic companies.

"Opening to both domestic and foreign enterprises is a major reform measure," Deputy Minister of Natural Resources Ling Yueming was quoted as saying by AFP.

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The ministry also said permits for mineral resources mining will be valid for five years. When firms apply for a renewal of exploration rights, their area of exploration will be cut by 25 percent.

Previously, international companies could enter the industry only via joint-ventures or through cooperation with Chinese firms, mainly state-owned enterprises such as China National Petroleum Company (CNPC) and China Petrochemical Corp (Sinopec).

"China is accelerating the sector reform due to growing energy security concerns," Zhu Kunfeng, Beijing-based analyst with IHS Markit, told Reuters.

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According to him, "Vitalizing the industry by diversifying the participants, including foreign and private investors, is the focus of that reform."

China currently imports 70 percent of the crude oil it refines and nearly half of its natural gas consumption.

For more stories on economy & finance visit RT's business section

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