PetroChina keeps downstream gas offers stable despite war risks

PETROCHINA, the country’s biggest natural gas supplier, will keep its contract prices largely unchanged this year to shield industrial consumers from surging global energy prices due to the Middle East conflict.

The firm will retain last year’s upper price limit, a move that’s also designed to support longer-term growth of the domestic gas industry, according to Chinese consultancy, OilChem.

PetroChina did not immediately respond to calls seeking comment.

The world’s second-biggest economy is well-positioned to weather the ongoing war-related gas disruptions thanks to higher-than-usual inventories, which built up last year when demand was softer. That’s despite Qatari liquefied natural gas (LNG), which is now halted due to the hostilities, accounting for 6 per cent of China’s consumption.

Spot LNG prices for May delivery to China have jumped about a third this month to US$17.13/million British termal units, according to official exchange data, but the availability of cheaper onshore gas and coal has kept a lid on price rallies. Asian spot LNG prices were at US$19.80/mmbtu on Tuesday, traders said.

China has been pushing to liberalise its gas market, letting suppliers pass on some costs to consumers, but has stopped short of allowing sharp price spikes that could hurt its economy.

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Domestic producers are set to ramp up gas production as demand for oil plateaus, and this should help mitigate against global geopolitical and energy disruptions, Dai Jiaquan, a senior researcher with PetroChina, said at the BloombergNEF summit in Beijing last week. BLOOMBERG