LNG prices in northern China likely to rise on tightened supply

07 May 2013 09:12  [Source: ICIS news]

SINGAPORE (ICIS)--Liquefied natural gas (LNG) prices in China are expected to increase as a result of a significant drop in natural gas supply, market sources said on Tuesday.

Gas supply has declined significantly in China’s northern regions since 2 May, after PetroChina decided to reduce its gas supply by about 26% to downstream users because of maintenance work at its gas fields, a source close to the company said.

PetroChina’s Huabei Oilfield and Changqing Oilfield, which are major onshore sources of gas in China, are scheduled for routine turnarounds in the May-June period, the source said.

Gas users in Inner Mongolia, Hebei, Shaanxi, Gansu and Ningxia provinces are hardest hit as their supply largely comes from the two oil fields, a gas company source based in northern China said.

Industrial users, gas stations and LNG plants were significantly affected, the source added.

There has been a minimal impact on residential consumers as household gas consumption is prioritised by most local governments, the source said, adding that some gas companies have started to purchase LNG in the spot market.

“LNG supply [has] tightened slightly,” said an LNG producer, who added that producers’ stocks are low and sales are brisk.

“This may push up prices,” he said.

The average price of LNG via truck delivery was yuan (CNY) 5,350/tonne ($867/tonne) on 6 May in south China, up by CNY42/tonne from a week earlier, according to ICIS C1 Energy assessments.

Market sources said the rise in LNG prices will be mild, as the supply of imported cargoes is sufficient and demand is relatively soft during China’s summer season, which is from May to August.

($1 = CNY6.17)

By: Ricki Wang
+65 6780 4359

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