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PetroChina seeks breakeven prices for imported gas ahead of midstream reform

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07 June 2019

PetroChina seeks breakeven prices for imported gas ahead of midstream reform

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

    • CNPC-PetroChina quick facts
    • PetroChina raises summer 2019 price above government benchmark
    • 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
    • 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 5 images and tables including:

  • 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:

  • Document

    PetroChina seeks breakeven prices for imported gas ahead of midstream reform

    PDF 923.02 KB

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