Natural gas price increases in pipeline
By Joyce Pan |
June 4, 2010, Friday
|
Print Edition
Print Edition
CHINA may further increase the price of natural gas as it moves toward a market-oriented pricing mechanism, according to analysts.
"China's recent natural gas price increase paves the way for the market-based pricing mechanism in the foreseeable future," Ying Wang, a director in Fitch's Asia-Pacific energy and utilities team, wrote in a report.
The process of establishing such a mechanism could be accelerated if imported liquefied natural gas prices rise significantly, according to Fitch Ratings.
China raised wholesale natural gas prices by 24.9 percent to 1,155 yuan (US$169) per 1,000 cubic meters on Tuesday, the first increase in more than two years. It equated to a rise of 0.23 yuan per cubic meter.
"Despite the steep jump, there is still a large price gap between domestically produced gas and imported," said Wu Ying, an analyst from Ping An Securities Co. "The move is a tentative attempt to precede the country's pricing-system reformation. More detailed plans involving more sectors will be rolled out in the future."
The onshore natural gas price is only a quarter of the price of LNG with equal energy value and about half the price of imported gas, according to the National Development and Reform Commission, the nation's top planner.
Natural gas consumption amounted to 90 billion cubic meters in 2009, and Fitch expects China's natural gas demand growth to remain strong at 8 to 10 percent annually for the next few years, with imported natural gas accounting for an increasing share of domestic gas consumption.
"China's recent natural gas price increase paves the way for the market-based pricing mechanism in the foreseeable future," Ying Wang, a director in Fitch's Asia-Pacific energy and utilities team, wrote in a report.
The process of establishing such a mechanism could be accelerated if imported liquefied natural gas prices rise significantly, according to Fitch Ratings.
China raised wholesale natural gas prices by 24.9 percent to 1,155 yuan (US$169) per 1,000 cubic meters on Tuesday, the first increase in more than two years. It equated to a rise of 0.23 yuan per cubic meter.
"Despite the steep jump, there is still a large price gap between domestically produced gas and imported," said Wu Ying, an analyst from Ping An Securities Co. "The move is a tentative attempt to precede the country's pricing-system reformation. More detailed plans involving more sectors will be rolled out in the future."
The onshore natural gas price is only a quarter of the price of LNG with equal energy value and about half the price of imported gas, according to the National Development and Reform Commission, the nation's top planner.
Natural gas consumption amounted to 90 billion cubic meters in 2009, and Fitch expects China's natural gas demand growth to remain strong at 8 to 10 percent annually for the next few years, with imported natural gas accounting for an increasing share of domestic gas consumption.
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