PetroChina's Kunlun Energy reopens top LNG plant to meet winter demand

PetroChina's logo is seen at its petrol station in Beijing, China, March 21, 2016. REUTERS/Kim Kyung-Hoon/File Photo

BEIJING (Reuters) - Kunlun Energy Co Ltd has resumed or was in the process of resuming production at seven liquefied natural gas (LNG) plants, including China’s largest, to meet upcoming winter demand, its parent PetroChina said on Tuesday.

The biggest plant, located in Huanggang in central Hubei province, was opened in 2014 and has a capacity of 5 million cubic meters per day. It was reopened earlier this month after a ten-month shutdown, according to a report carried on the website of China National Petroleum Corporation Corp [CNPET.UL], that state giant that is in turn parent of PetroChina.

The CNPC report gave no details on the reason for the shutdown. PetroChina said Kunlun has also started resuming operations at plants in Guangyuan, Guang’an, Zhaoqing, Renqiu, Bazhou and Ansai, mostly in southwestern Sichuan province and northern Shaanxi province.

Most of these plants process locally produced natural gas into LNG in areas not connected to a pipeline grid for transport by truck to places it can be used as a transport, industry or other fuel.

News of the restarts comes days after the government called on producers to ramp up natural gas output ahead of the winter to ensure plentiful supplies.

Industry experts also expect major gas producers like PetroChina to start raising wholesale gas prices from next month under a government policy in late 2015 that allows a 10-20 percent upward adjustment to non-residential users.

Kunlun is one of the country’s largest players in onshore LNG facilities, having spent billions of dollars on a dozen LNG plants, mainly in the country’s west and north, and building over 600 gas refueling stations.

The company separately operates two multi-billion-dollar LNG import terminals on China’s east coast.

Since around mid-2014 Kunlun was forced to shut several of its key LNG plants, including the Huanggang facility, as gas lost its relative competitiveness after a plunge in oil prices. It was not clear how long the plants were closed then.

Reporting by Muyu Xu and Meng Meng; Additional reporting by Chen Aizhu; Editing by Tom Hogue