Friday, February 10, 2012

China natural gas prices approaching ex-factory price

Domestic gas prices will change? Yesterday, Vice President and Deputy General Manager of China National Petroleum, said Li Hualin: natural gas will likely raise prices in the near future.This increase may be a foreshadowing of the natural gas pricing mechanism reform. However, even if the price increases, domestic gas field ex-factory price is not expected to exceed last year, Sinopec Puguang gas field, the benchmark price of 1.28 yuan / cubic meter.China Petroleum and media conference yesterday, Li Hualin "First Financial Daily reporter in an interview, said:" As far as we know, the country recently may be appropriate to adjust the price. "After news that China's natural gas pricing mechanism launched originally scheduled for April 1, but for various reasons delayed.China Petroleum and Chief Financial Officer Zhou Mingchun had also revealed that the "first price" for natural gas prices the market mechanism to take a step, the future price mechanism ultimately to embark on market-oriented track. "The number of informed sources said that their understanding of the situation, China's natural gas pricing mechanism may take the weighted average method, the method can solve the overseas high gas prices, low domestic gas prices. Our reporter learned that China - Turkmenistan pipeline natural gas to about 2 yuan / cubic meter of gas prices in Xinjiang, while domestic natural gas line to the base price of the fertilizer plant is 0.58 yuan / cubic meter.If the first mention of domestic gas price adjustment may be how much?End of last year, Sinopec is determined based on the Puguang Gas Field Development and Reform Commission, "East Gas Transmission Project trial run, the benchmark price of 1.28 yuan / cubic meter of the project, both supply and demand can also be plus or minus 10%. Than the natural gas line in this price of 0.56 yuan to 0.96 yuan / cubic meter much higher.Investment Securities, a researcher on that analysis, the NDRC price adjustment in the short term, will not necessarily be adjusted to 1.28 yuan / cubic meter of such a high position.Li Hualin said: "natural gas pricing is the key to the economic development level, set too low the manufacturer has no enthusiasm, excessive, then we can not be sold, the countries are seriously active research and we hope to reflect the natural gas supply and demand, scarcity and alternative but certainly is a slow and gradually increase process, and ultimately by the Development and Reform Commission decision. "Another reason is that the domestic gas price is not too high, the manufacturer's gas sector income is considerable. Reporter learned from China's oil earnings in 2009 to see its natural gas and pipeline segment gross margin was 28 percent, second only to the exploration and production blocks 35.4% of the gross profit margin, while the company's refining, marketing gross profit margin of only 8.4% and 7.4% respectively.Investment securities of the researcher, said: "In addition to the residents of the main natural gas customers, as well as fertilizer companies. Pro southwest and northern sudden drought, rain and snow, the fertilizer business inventories high, the price every day on the decline, and some serious losses. The gas price is too high, fertilizer companies can not afford. "Li Hualin also said yesterday, the price of gas also depends on the relationship between supply and demand. For its part, pricing is more important to take into account (upstream and downstream businesses and residents) to accept the degree.In addition, the industry is expected that the Development and Reform Commission in April to improve the retail price of gasoline and diesel, such as over the same period a substantial increase in gas prices, and control within the 3% annual CPI target.Due to excessive demand for natural gas, better market-oriented pricing is always in one direction, the balance of domestic natural gas supply and demand is good. Li Hualin said: "We expect sales of natural gas with the rapid growth in demand for oil in the forecast, the domestic natural gas demand this year about 105 billion cubic meters in 2012 and 2015, respectively, to reach 150 billion cubic meters, 220 billion cubic meters . "
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