Chinese cities, including Shanghai, will follow Beijing's move
to raise household natural gas prices to move them closer to those
of oil, and there are likely to be more increases, officials from
PetroChina Co, said on Wednesday.
Beijing lifted household gas price by 0.15 yuan to 2.05 yuan (27
US cents) per cubic meter over the weekend. This will translate
into households paying an additional monthly fee of some 2.7 yuan
each, local media estimated.
Even so, domestic gas prices are only 30 percent of those for
oil for producing the same amount of heat, according to Li
Jingming, a vice president of the exploration research institute at
PetroChina, China's largest oil and gas producer.
"So China must increase domestic prices to catch up with the
world level," Li said. "Otherwise, lower prices will cause wastes
and affect imports."
Gas accounts for about 2.5 percent of China's primary energy
consumption, against the global average of 23 percent, Li said.
China has to import some gas to meet its demand for the cleaner
burning fuel.
He said China is studying building pipelines to import cheap gas
from countries like Myanmar.
Bai Lanjun, an economist at PetroChina's gas research unit, said
he has learnt from the company headquarters and the National
Development and Reform Commission that the gas prices will also
rise in other cities soon.
"Concerning inflation and low-incomers, the rise in gas prices
will happen several times rather than being a one-off move," Bai
said.
Shanghai and other cities have yet to announce how much gas
prices will rise. But the local price authority has held a hearing
last year on creating a flexible pricing mechanism for natural
gas.
The trend is that domestic gas prices will move towards global
level and follow oil rates, Liu said.
(Shanghai Daily April 5, 2007)