China to strengthen accountability execution on projects in violation of environmental impact assessment and Yunnan Project PX keeps attracting public attention

On 18 March 2015, PRC Ministry of Environmental Protection (the MEP) issued the Notice on Further Enhance Accountability Ascertaining for Projects in Violation of Environmental Impact Assessment (the Notice). According to the Notice, the applicable administrative penalty shall be strictly enforced with respect to projects the construction of which has violated relevant environmental impact assessment report (the EIA Report), especially for projects of which construction has started before relevant EIA Report is approved, and projects to which major changes were made to the construction plan before such changes have been approved by relevant environmental protection bureau. In addition, if the construction party is governmental agency or stated owned enterprise, relevant responsible persons shall be transferred to the discipline inspection authority at the same level.

At the same time, the controversial Project PX in Kunming, Yunnan (the Yunnan Project PX) attracts the public’s attention once again. This project was approved by PRC National Development and Reform Commission in 2013. By the beginning of 2015, construction of the oil refinery plant in the Yunnan Project PX has been in process.  However, as reported, construction of the plant does not comply with the EIA report that was originally approved by the environmental protection authority. It is alleged that CNPC has violated relevant environmental protection laws and regulations by amending the construction plan and commencing the construction under the amended plan without obtaining prior approval from relevant environmental protection authority.

On April 16, CNPC Yunnan Branch published the EIA Report on Optimization and Adjustment of CNPC Yunnan Project PX (simplified) (the Amended EIA Report), inviting the public to provide comments. Pursuant to the Amended EIA Report, CNPC intends to make optimization and adjustment to the Yunnan Project PX, and that all the adjustments to be made are in compliance with the requirement of cleaning production and the pollutant emission standard as stipulated in the original EIA report, and that the environmental risk level is acceptable. According to CNPC Yunnan Branch, any person or entity that will be affected by the project may submit comments within 10 working days of the publication of the Amended EIA Report. 

China discovered more oil and gas deposits in 2014

PRC Ministry of Land and Resources (the MLR) released new data on discovery of crude oil and natural gas deposits in a press conference on Thursday April 16. According to the MLR, China discovered more than 1.1 trillion cubic metres of new natural gas reserves last year and this hits a record of history.  At the same time, new proven crude oil deposits were nearly 1.06 billion tonnes in 2014, which has been the eighth year that the proven amount exceeded 1 billion tonnes, making a steady growth. According to the data provided by the MLR, there are 474.9 billion cubic metres of natural gas and 187 million tonnes of oil can be exploited with current technology among the new discoveries. New discovered amount of shale gas reserves were 106.75 billion cubic metres, 26.69 billion of which can be exploited. This is the first time for China to release the amount of proven reserves of shale gas since 2011, when the government included the shale gas as an independent mineral resource. Total amount of new discovered coal-bed methane was 60.2 billion cubic metres, increasing 155.3 percentage compared with 2013.

China Released New Rules on Electric Power System Reform

On March 15, 2015, Central Committee of the Communist Party of China and the State Council issued an opinion on Further Reform of the Electric Power System (the Opinion). The Opinion is aimed at gradually loosening the state’s monopoly and further open up the power sector for market competition. The Opinion points out that the current major tasks of electric system reform shall be focused on the following: promoting the reform of power price, power trading system and power demand plan; increasing the role of market mechanism; promoting the reform of side sales of power steadily and opening up the power sale market for social capital orderly; opening grid fair access and establishing a new mechanism of distributed power development; and strengthening the overall planning and scientific supervision of electric power and promoting safe operation of  electric power. Specifically, power price reform is likely to be of major importance. The new pricing system aims to set up the cost-saving mechanism for power grid enterprises and promote the marketisation of electricity.

Ten Proposals to Promote Coal Industry Development in China

On March 25, 2015, the National Energy Administration (the NEA) released the Guiding Opinions on Promoting the Scientific Development of the Coal Industry (the Guiding Opinions), coming up with 10 proposals to optimize the development layout of the coal industry and adjust the construction of the coal industry organizations to assist coal industry turning losses into profits. According to the Opinions, in near future, no new coal mine projects shall be approved in the eastern regions in principle; the central regions (including the Northeast) shall remain a reasonable pace of development, and projects for continuous production of coal mine in case of resource depletion shall be appropriately developed based on an “one out, one in” model; for the western regions, the development in resources and the coordination between resources development and protection of eco-environments shall be strengthened, and new coal projects shall be developed with a focus on needs of large coal-fired power bases having major responsibility of power transmission and modern coal chemical projects, provided that the current coal production capacity shall be fully utilised. The Opinions also provide that, on the basis of large coal bases, large and medium-sized modern coal mine shall be constructed steadily and a number of large and medium-sized key coal enterprises shall be developed. In addition, strict restrictions on construction of new coal projects shall be set forth, and no approval shall be granted to new coal mine projects with a production capacity of less than 300,000 tonnes/year or to new projects of coal and gas outburst mines with an annual production capacity of less than 900,000 tonnes.