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Imports may take up 35% of natural gas supplies

By Richard Fu  (Shanghai Daily)

11:13, December 04, 2012

IMPORTS may account for 35 percent of China's natural gas supplies by 2015, up from 15 percent in 2010, raising pressure to push ahead a pricing reform, the government said.

China's annual imports will reach 93.5 billion cubic meters in 2015, based on contracts already signed, according to a five-year plan on the gas sector posted yesterday on the National Energy Administration's website.

Domestic output will increase to 176 billion cubic meters in 2015, including 37.5 billion cubic meters of unconventional fuel such as coal-bed methane and gas turned from coal.

Gas use in China has been rising rapidly as the government tries to reduce pollution from coal burning and reliance on oil imports.

But as gas price is regulated in the domestic market, Chinese energy companies led by PetroChina Co have been losing money in their gas import business. They have also been hit by rising imports of both piped gas from neighboring countries and liquefied natural gas carried by ships.

But analysts have said price reforms could take longer as the government needs to consider wide implications of a price rise such as the affordability of residents and competitiveness of related sectors.

It will "take time" for the government to reform gas prices to make them more liberal, the five-year plan said.

But the plan foresees ex-factory price of shale gas to be set according to the market as the government encourages development of the nascent but promising sector.

China is believed to have the world's largest deposits of shale gas but it has yet to produce any gas commercially due to technology issues.

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