Insight
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
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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 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:
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