UPDATE 1-China Gas fuel sales growth slows as lockdown batters demand

* Gas sales up 2.9% in financial yr, vs. 32% growth in previous yr

* Gas sales started recovery in April after slumps in Feb-March

* To benefit from new national pipeline group - chairman (Adds chairman’s comment on demand recovery; sales forecast)

SINGAPORE, June 26 (Reuters) - China Gas Holdings Ltd , one of China’s largest independent piped gas distributors,said on Friday gas sales in its latest financial year rose just 2.9%, a sharp fall from the previous year as the coronavirus pandemic hit fuel demand.

Demand was worst hit during February-March when sales fell 13% versus the same period last year, company executives told reporters.

However, demand started to recover strongly from April as the Chinese economy reopened, leading the firm to forecast an annual growth of 15% in total gas sales this year.

China Gas sold 25.4 billion cubic metres of gas in the year ended March 31, equivalent to roughly 8% of China’s total gas demand, but the rate of growth collapsed from a 32% surge in the year earlier period.

“Adversely impacted by COVID-19, negative growth for energy consumption kicked in for the first quarter of 2020 as energy demand derived from industrial, commercial and transportation sectors contracted noticeably,” the firm said its filing to the Hong Kong stock exchange.

The group, which earlier said total revenue rose by 0.3% to HK$59.54 billion ($7.68 billion), noted gas sales to households had grown by a quarter and it had added 5.4 million new residential users last year, an increase of 6.3%. Gas sales to industry rose 5.2%, while those to the commercial sector contracted 9%.

Sales to the fuel retail sector, including liquefied natural gas and compressed natural gas filling stations, fell 16% to 1 billion cubic metres, as transportation came to a near halt during coronavirus-related lockdowns.

Sales of liquefied petroleum gas, used for cooking and as petrochemical feedstock, dropped by an annual 4.2% to 3.83 million tonnes.

Company chairman Liu Minghui said his firm would benefit from Beijing’s plan to launch a planned national oil and gas pipeline group in September that will help lower its fuel purchase cost from upstream gas producers.

“The new national pipeline group will help diversify gas supplies and bolster our company’s gross margins,” Liu said.

The firm will keep its capital spending largely steady in the new year at HK$10 billion.

The company said it had completed construction of a gas transmission pipeline network with a total length of 402,381 km.

The firm expected its distribution network in northeast China to generate 500 million cubic metres of gas sales this year, due to its proximity to the Russia-China Power of Siberia project that started pumping gas to China in late 2019.

China Gas’ Hong Kong listed shares have fallen 6.8% so far this year, versus a 14% fall in the broader Heng Seng Index . ($1 = 7.7501 Hong Kong dollars) (Reporting by Chen Aizhu; Editing by Kirsten Donovan and Chizu Nomiyama)