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China's gas reform said to boost distributors and LNG imports
来源：shippingazette 编辑：编辑部 发布：2023/08/08 09:09:20
CHINA Gas Holdings Ltd executive Tan Yuwei believes that China's relaxation of natural gas price controls will have positive effects on local utilities and boost demand for seaborne gas imports, reports Bloomberg.
The regulatory approval for increases in residential gas prices is expected to result in a 30 per cent jump in the company's gross margin this year.
The move also opens doors for the development of previously unprofitable projects.
China's measured approach to loosening price controls is part of its efforts to gradually introduce more market-based rules in its heavily regulated energy system.
This shift allows local utilities to pass on some of the higher costs for imported gas, which surged last year due to the Russian invasion of Ukraine.
The price reforms are expected to stimulate household gas sales and encourage interest in purchasing more liquefied natural gas (LNG) through spot market transactions and term deals.
China Gas has seen a decline in its shares this year, but the recent news boosted the stock 3.4 per cent.
China Gas is optimistic about the resurgence of gas demand in the country, despite a decline last year.
The company sold seven per cent more gas in the year through March, reaching over 45 million households, but higher prices led to a 44 per cent drop in profit.
As a significant LNG importer, China Gas has established alliances with China National Offshore Oil Corp, and is independently seeking to add about two million tons more of annual supply.
The company has already signed deals with US suppliers for 3.7 million tons of LNG.
Moreover, China Gas expects its LNG imports to double due to the commissioning of a major import terminal in Shandong province by the end of the following year, as well as its minority interests in two other terminals.
The company is also a major beneficiary of Russian gas imports, particularly in the northeast region, where it holds the largest market share.
With the Power of Siberia pipeline, imports from Russia are expected to reach full capacity by 2024, a year ahead of schedule, as a link into Shanghai nears completion.
The regulatory approval for increases in residential gas prices is expected to result in a 30 per cent jump in the company's gross margin this year.
The move also opens doors for the development of previously unprofitable projects.
China's measured approach to loosening price controls is part of its efforts to gradually introduce more market-based rules in its heavily regulated energy system.
This shift allows local utilities to pass on some of the higher costs for imported gas, which surged last year due to the Russian invasion of Ukraine.
The price reforms are expected to stimulate household gas sales and encourage interest in purchasing more liquefied natural gas (LNG) through spot market transactions and term deals.
China Gas has seen a decline in its shares this year, but the recent news boosted the stock 3.4 per cent.
China Gas is optimistic about the resurgence of gas demand in the country, despite a decline last year.
The company sold seven per cent more gas in the year through March, reaching over 45 million households, but higher prices led to a 44 per cent drop in profit.
As a significant LNG importer, China Gas has established alliances with China National Offshore Oil Corp, and is independently seeking to add about two million tons more of annual supply.
The company has already signed deals with US suppliers for 3.7 million tons of LNG.
Moreover, China Gas expects its LNG imports to double due to the commissioning of a major import terminal in Shandong province by the end of the following year, as well as its minority interests in two other terminals.
The company is also a major beneficiary of Russian gas imports, particularly in the northeast region, where it holds the largest market share.
With the Power of Siberia pipeline, imports from Russia are expected to reach full capacity by 2024, a year ahead of schedule, as a link into Shanghai nears completion.