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Nation to raise natural gas prices gradually

(Shenzhen Daily)
Updated: 2007-01-29 14:58

China will raise domestic natural gas prices gradually to bring them in line with the international market.

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Bi Jingquan, a vice-minister of theNational Development and Reform Commission(NDRC), said that based on international trends, the price of domestic ex-factory natural gas per thousand cubic meters ought to be set at around 56 percent of the price of one metric ton of crude oil sold on the global market. That would put domestic natural gas prices at around 1,900 yuan (US$244) per thousand cubic meters, he said.

The last natural gas price hike was in December when China raised the ex-factory prices of natural gas by 50 to 150 yuan per thousand cubic meters — the largest hike in recent years.

NDRC said at that time that benchmark natural gas prices would be adjusted each year based on the prices of other resources such as petroleum, and that producers may raise factory prices by a maximum 8 percent.

Bi said the low domestic natural gas prices have caused a "serious" mismatch between supply and demand. NDRC officials earlier predicted that China's natural gas demand would likely reach 100 billion cubic meters by 2010.

The plan is for the government to raise the resources tax or collect a certain portion of companies' profits and use these funds to subsidize low-income people or industries that use natural gas as raw materials, such as the public transportation sector.

Bi also said the government is aiming to "bring the prices of refined oil in line with international market levels in a controlled way."