Winter weather triggers natural gas shortages

HANGZHOU: The municipal government of Hangzhou, in East China's Zhejiang province, stopped all natural gas supplies to entertainment businesses one recent weekend to guarantee supplies to the city's 410,000 households.

The city government also reduced gas supplies to hotels, office buildings and shopping malls by 20 percent.

Chinese cities have been grappling for several weeks with shortages of natural gas triggered by the unusually early winter weather.

Transportation authorities in the southwestern China city of Chongqing said that 6,200 of the city's 7,000 buses were powered by natural gas, and that services were pared back as supplies slowed. The municipal government on Nov 23 also allowed natural gas-fueled taxis to levy a two-yuan surcharge per trip to offset their losses.

In Wuhan, the capital of central China's Hubei province, the city's biggest natural gas consumer - Intex Glass (Wuhan) Co Ltd - is on the verge of bankruptcy because of the gas shortage. The company has more than 100 employees on its payroll.

"Our factory stopped production for more than a week. The company has ordered diesel as a substitute for natural gas to fuel the smelter to prevent our materials from degenerating," said Ao Wanzhi, manager of the company.

The company's daily gas consumption was about 145,000 cubic meters (cu m), which accounted for one-tenth of the city's total. The company's monthly production value was estimated at 50 million yuan.

The city government started to cut natural gas supplies to industrial users on Nov 17 in an effort to ensure residential supplies.

A Wuhan resident surnamed Chen, from Tongxin Community, said she had hoped to conserve credit on her gas card as she feared a possible price hike, but the gas companies had limited the gas sales to individual buyers.

"You can't buy more gas even if you've got money. I was told I can only buy 168 yuan worth of gas this month," she said.

A spokesman with the Wuhan subsidiary of China National Petroleum Corp (CNPC) said natural gas consumption for heating had soared even before a cold spell hit the city late last month.

Daily consumption

The city's daily consumption had reached 2.2 million cu m before the snow came, as compared with the company's planned ratio of 1.46 million cu m to the city.

Many people blame the gas supplier for the shortfall. However, a spokesman for CNPC, China's leading oil and gas producer, said late last month that its daily natural gas supply has risen from 169 million cu m at the beginning of the month to 189 million cu m.

He said most of the company's gas transmission pipelines had reached their full capacity.

According to BP Statistical Review 2009, China's natural gas output in 2008 was 76.1 billion cu m, but that consumption reached 80.7 billion cu m in the same period. The report said the country's natural gas consumption has been increasing more than 20 percent annually during the past few years.

The prices of natural gas also vary according to natural gas origins. For example, the price of outgoing gas from West China's gas fields are cheaper than that from northeastern China and North China.

China in August struck its biggest trade deal with Australia, which was worth $41 billion, to buy natural gas.

Professor Dong Xiucheng of China University of Petroleum said the growth in natural gas demand had far outpaced the supply. The country has not set up big gas reserves to cope with emergencies, he said.

"Natural gas companies do not share their pipeline resources, which makes it difficult to divert gas to the needy in time of crisis," Dong added.

Lin Boqiang, director of the Energy Economy Research Center at Xiamen University, said government-controlled natural gas prices were not reflecting the commodity's true market value.

For example, the cost of sending natural gas generated from gas fields in West China's Sichuan to East China's Shanghai is 3 yuan per cu m. However, the retail price now is 2.5 yuan per cu m.

"Under the mechanism, energy suppliers are not motivated to expand production to meet soaring demand," he said.

Lin said the surging demand during cold weather months reflected the growing importance of natural gas in people's daily lives.

He said it is necessary to reshape the country's natural gas industry development strategy to first secure residential use of the resource, rather than use it as fuel for petrochemical projects or power plants.

Cao Changqing, director of the pricing department of the National Development and Reform Commission, said last month that the country's natural gas price reform would not be completed in 2009.

This was the clearest indication so far that there will not be a price hike this year by the commission, which is in charge of the country's natural gas pricing mechanism.

Xinhua

(China Daily 12/05/2009 page4)