PetroChina Co., the country’s biggest natural gas supplier, headed for its biggest gain in four years in Hong Kong trading after Beijing announced it will raise prices for non-residential users.
The stock advanced 6.1 percent to HK$8.75 at 1:53 p.m., the most since May. 4, 2009. The city’s benchmark Hang Seng Index fell 0.1 percent. The market was closed yesterday for a public holiday.
China will raise non-residential natural gas prices on July 10 to 1.95 yuan per cubic meter, from 1.69 yuan, the National Development and Reform Commission said in a statement on its website June 28. The nationwide roll-out of the increase takes effect after a pricing reform plan was announced in December 2011 and tested in local provinces. It also follows an increase in the price of natural gas in India on June 27, as governments try to encourage investment in cleaner burning fuels.
“PetroChina certainly will benefit most from the move, but the NDRC wanted more to use the policy to gradually streamline energy prices and make sure industrial users will pay a fair price for the energy they consume,” said Shi Yan, an analyst at UOB-Kay Hian Ltd. in Shanghai. “Eventually higher energy prices will force polluters out of business when energy prices are decided by the market.”
China won’t raise residential prices this time to avoid affecting the daily lives of the people, the NDRC said in its statement. Residential gas consumption was 20 percent of China’s total in 2012, HSBC Holdings Plc said in a research note today.
Premier Li Keqiang has encouraged the use of cleaner fuels such as natural gas and renewable energy to reduce reliance on coal and keep air pollution in check.
The price increase will help “reduce losses on imported natural gas,” and drive more upstream investment in the fuel, Simon Powell, an oil and gas analyst at CLSA Ltd. in Hong Kong, said by phone today.
Natural gas import prices climbed 69 percent between 2010 and 2012, state-run China National Petroleum Corp. said on May 10, while average domestic gas retail prices in provincial cities gained only 24 percent in the five years to 2012. The resource currently accounts for 5.4 percent of China’s energy mix, the company said.
Higher prices will also encourage companies to increase natural gas imports and put more effort into exploration and extraction, the NDRC said in a separate statement on its website.
Gas distributors declined on concern that higher prices may hurt demand from commercial and industrial customers.
China Resources Gas Group Ltd., dropped 4.9 percent to HK$19.02 in Hong Kong, while Beijing Enterprises Holdings Ltd. fell 5.3 percent and China Gas Holdings Ltd. declined 0.4 percent.