Are you sure?

PetroChina expects China gas price rise

PetroChina President Zhou Jiping said his company expects the government to raise domestic natural gas prices to catch up with significantly higher international markets, local media reported.

The remark, which came only days after a comment by a power industry executive on a possible imminent tariff rise to cover high coal costs, was a sign that energy price reforms may have moved up a notch in Beijing's economic recovery plan, analysts said.

“Compared with overseas prices, China's gas prices are indeed very low,” Zhou was quoted as saying by the Beijing News, “We expect gas prices to be raised, but the specific changes are set by the National Development and Reform Commission.”

Analysts said price liberalization in sectors including energy may be the government's next move to bolster the slowing economy.

“First came the stimulus package, then revitalizing plans for different sectors. What else can the government do to achieve its economic growth target?” said Xing Zhiqiang, an analyst with government-backed investment bank China International Capital Corp Ltd (CICC).

China last raised gas prices in November 2007. Lagging domestic prices for the clean fuel have long been a hurdle to boosting use of gas, which makes up only 3% of China's overall energy consumption.

The Beijing News report did not provide an expected timing for the possible price increase.

China's refined fuel prices have taken a lead so far in aligning with global markets, with the introduction at the beginning of 2009 of a new fuel price system based on crude costs in three international markets.

PetroChina, Asia's largest oil and gas producer, supplies about 70% of China's gas market. (Reuters)