BEIJING Aug 25 Chemical firms using natural gas
as feedstock in southwestern Chinese provinces were facing
mounting risks to scale down and even close operations due to
gas shortages and rising gas prices, an industry newspaper
reported on Thursday.
These firms, including urea and methanol makers such as
Guizhou Chitianhua Co , Yunnan Yuntianhua
and Sichuan Chemical Industry Holding Co, need 9.5 billion cubic
metres (bcm) of gas a year for production purposes, but actual
supplies were only 6 bcm, the China Chemical Industry News
A 450,000 tonnes-per-year (tpy) synthetic ammonia facility
and an 800,000-tpy urea unit, built by Jiangfeng Chemicals
and which cost 3 billion yuan, have been idled since
they were ready for production in August 2010 because of a "gas
shortage", the report said.
The industry was taking a further hit by a recent government
approval in Sichuan, China's largest gas user by region, for
leading gas supplier PetroChina to charge higher
prices on new gas supplies.
Excluding tranportation costs, PetroChina will charge 2.35
yuan per cubic metre for gas imported from Turkmenistan or
sourced from rival Sinopec's Puguang gasfield, a price
far higher than those for existing supplies that ranged from
0.92 to 1.9 yuan a cubic metre, the newspaper report said.
China's domestic gas production trailed demand amid robust
economic expansion, and the shortages were in part exacerbated
by state-set low prices.
For now, nearly 20 percent of domestic gas consumption is
imported either by pipeline or by liquefied natural gas
carriers. China only started pipeline imported gas in 2009 and
LNG in 2006.
PetroChina has been incurring losses for gas imports from
Turkmenistan since late 2009, but China recently offered tax
rebates for gas imports, and higher gas selling prices suggest
cost pressures for importers eased.
(Reported by Jim Bai and Chen Aizhu; Editing by Ken Wills)