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Chinese cities grappling with natural gas shortage

(Xinhua)
Updated: 2009-11-23 20:43

The prices of natural gas also vary according to natural gas origins. The price of outgoing gas from west China's gas fields are cheaper than that from northeast and north China.

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

Professor Dong Xiucheng, of the 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.

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

Lin Boqiang, director of Energy Economy Research Center of Xiamen University, said the government-controlled natural gas price was 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 cubic meter. However, the retail price now is 2.5 yuan.

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

He said the surging demand during cold weather reflected the growing importance of natural gas in Chinese people's daily lives. It was necessary to re-shape the country's natural gas industry development strategy to firstly secure residential use of the resource rather than use it as fuel for petrochemical projects or power plants.

Cao Changqing, director of Pricing Department of the National Development and Reform Commission, said on Thursday that the country's natural gas price reform would not be completed in 2009.

This was the clearest indication so far there will not be a price hike this year by the top economic planner, which is in charge of natural gas pricing mechanism reform.

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