Gas firms gain, coal shares drop
Print Edition
SHARES of coal producers dropped while those of gas distributors rose, as news of China’s biggest-ever gas deal rippled through the country’s stock market yesterday.
The Shanghai Composite Index shed 0.18 percent, or 3.67 points, to 2,021.29.
On Wednesday, China signed a 30-year contract with Russia to buy natural gas from Siberia. The deal, said to be worth US$400 billion, came after a decade of negotiations. Delivery of gas will start in 2018 under a deal that Russian President Vladimir Putin described as “the biggest contract in the history of the gas sector of the former USSR.”
China is seeking to tackle air pollution by reducing the country’s use of coal and increasing use of cleaner-burning gas.
Datong Coal Industry shed 1.3 percent to 6.12 yuan (98 US cents), plummeting from a 10 percent surge before the gas deal was announced. Guizhou Panjiang Refined Coal fell 2 percent to 7.23 yuan.
Among the companies expected to benefit from the deal are those that distribute gas. Hong Kong-listed ENN Energy Holdings, China’s first privately owned clean energy distributor, jumped 4 percent to HK$56.55 (US$7.30). China Gas Holdings rose 6 percent to HK$13.10. Beijing Enterprises Holdings, which distributes natural gas, rose 7 percent to HK$70.
Shares in PetroChina, a subsidiary of China National Petroleum Corp, which signed the deal with Russia’s Gazprom, fell 0.39 percent to 7.64 yuan. Some analysts said the price China is paying for the Russian gas may be too high for PetroChina to make a positive return on the deal if it purchases the gas from CNPC and sells it in China, where prices are regulated. Details of the deal were sketchy.
“The risk is the company will have to bear the import losses if it fails to raise domestic gas prices to sufficiently higher levels,” Bernstein analyst Neil Beveridge said.
He added that the deal will benefit Chinese gas distributors.
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