Two years ago, Sinopec introduced private capital for fundraising for the third line of the West-East gas pipeline project, which is believed to be the first time the company introduced private capital.

"There are already many private companies involved in the gas station business, such as Guanghui Energy Co Ltd, which is doing very well in the natural gas business in Xinjiang," said Wang.

Sinopec is allowing in private investors

Sinopec profit increases more than 10b yuan

She said Sinopec doesn't hold a big share in the natural gas market in Xinjiang, which means the new cooperation can provide the State-owned company with the opportunity to integrate its natural gas supply chain into the autonomous region.

"Guangzheng has money while Sinopec can ensure the natural gas supply based on its strong upstream advantages," added Wang.

In the past, Sinopec's subsidiary has been primarily engaged in oil product and downstream sales, including gasoline, diesel, liquefied petroleum gas and natural gas in southern Xinjiang.

The natural gas market in Xinjiang has huge potential because of the coal-to-gas project in the area being developed in order to reduce pollution and improve the environment, said Wang.

"It's smart to make arrangement in Xinjiang to expand the natural gas business, but their competitor, Guanghui Energy, is very strong," she said.

Han Xiaoping, chief information officer of the China Energy Net Consulting Co Ltd, said it's a good trend that more private companies are participating in the oil and gas sector because it will provide more effective supervision over State-owned enterprises.

"Even though private companies may not have the controlling stake, they have the right to know the financial and operational details of the investment project, which is beneficial for the healthy development of the company," he said. "Meanwhile it can also cut costs for both when they put their individual strengths together."

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