China Plans Gas Price Increase to Bolster Supply Amid Pollution

China plans to raise natural gas prices this year to boost supplies of the cleaner-burning fuel in an effort to fight pollution.

Gas for non-residential users will be adjusted at city gates at “an appropriate time” this year, the National Development and Reform Commission said in its work report before the national legislature starts its annual meeting today.

Expanding gas supply is an important step in curbing air pollution, Wu Xinqiong, the head of the National Energy Administration, said last month. China uses coal for about two-thirds of its energy and is the world’s biggest carbon emitter. President Xi Jinping, who took power a year ago, called pollution the “most prominent” issue faced by Beijing, where the National People’s Congress gathers today.

The plan “continues the positive momentum for natural gas pricing reform, hinting that there could be more price hikes for industrial and commercial users,” Gordon Kwan, the regional head of oil and gas research at Nomura Holdings Inc., said in an e-mail today. There’s “thus more incentive for producers like PetroChina and Sinopec to accelerate their higher-cost natural gas projects to meet rising demand for more environmentally friendly fuels.”

On-grid wind power prices will also be “adjusted” this year, the NDRC said. China will raise discharge fees for major pollutants and start a campaign to encourage more than 10,000 companies to save energy and reduce their carbon emissions, the report shows.

Maximize Supplies

Oil and gas companies should increase spending in exploration, speed up the construction of pipelines and storage facilities and expand imports to maximize gas supplies, Wu said at a meeting on Feb. 13, according to a report on the NEA’s website. The government will also introduce more policy support for shale-gas development, he said.

China’s imports of liquefied natural gas rose to a record high for a second month in January, customs data show. Shipments climbed about 77 percent from a year ago to 2.65 million metric tons. The nation’s gas demand may expand by almost 15 percent this year to 193 billion cubic meters, the NEA said.

— With assistance by Jing Yang, and Sarah Chen

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