Insight
PetroChina seeks breakeven prices for imported gas ahead of midstream reform
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
The NOC previously raised gas prices with the primary purpose of managing the supply-demand balance. This time, it mainly aims to profit from gas sales. In March 2019, China officially announced it would establish a national pipeline company. PetroChina has only been profitable as an integrated gas company (gas production, imports, sales and infrastructure operation). It didn't make money as a standalone gas importer. On the eve of the unbundling of its profitable gas pipelines, PetroChina had to revise its pricing tactic to stop losses on imported gas. Despite possible short-term gas demand turbulence, midstream reform will benefit the long-term development of China’s gas market by achieving non-discriminatory third-party access, potentially improving pipeline operational and investment efficiency.
Table of contents
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Executive summary
- CNPC-PetroChina quick facts
- PetroChina raises summer 2019 price above government benchmark
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Why is PetroChina increasing prices in summer?
- The NOC just raised prices in winter 2018/19
- PetroChina has suffered huge losses on sales of imported gas
- Creation of a national pipeline company will remove PetroChina’s profitable gas transmission business
- Summer price scheme will allow PetroChina to finally break even on sales of imported gas
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The midstream reform will reshape China’s market landscape
- Near term, price hike is negative for demand growth, but could make the NOC re-focus on supply optimisation
- Midstream and downstream will shoulder more responsibility in absorbing imported gas cost and supply security
- potentially changing Chinese gas/LNG buyers’ focus on import preferences
- Despite short-term turbulence, midstream reform will likely continue
Tables and charts
This report includes the following images and tables:
- 2019 summer price scheme for wholesale gas at provincial city gate
- PetroChina's profit/Loss in gas business
- PetroChina's imported gas sales vs unit loss
- Build up of pipeline imports price
- Build up of LNG imports price
What's included
This report contains:
