21 May 2018, News Wires – PetroChina has cut supplies to some of the industrial users in the northern and western regions of China as it looks to avoid gas shortages it struggled with the past winter.
Citing sources, Reuters reports the company’s decision came only two months after the last winter crunch and as a response to the first signs of the market tightening.
The preparations started during this month with PetroChina bumping up prices for a number of customers including several liquefaction plants in western provinces and Inner Mongolia.
Currently, there are over 100 small inland LNG plants that are sourcing feed gas from PetroChina or Sinopec, and the majority of these facilities are likely to be affected by the supply curbs.
The country’s natural gas consumption has been climbing steadily, and so did its LNG imports. Natural gas consumption rose some 14 percent, equivalent to 71.1 million tons, which resulted in an increase in spot LNG purchases.
At the current rate, China’s natural gas demand is exceeding the 10 percent annual growth projected by its state-run compatriot CNPC.
“We were caught by surprise,” the official said. “This is the first time PetroChina has reduced our supplies ahead of summer. The price hike once again will dampen our margin.” He requested anonymity because he is not allowed to speak with media.
Wang Haohao, an analyst with Zibo Longzhong Information Group, said the price hike and supply curb will likely hit all LNG plants in the Inner Mongolia region and neighbouring Shaanxi province.
China operates more than 100 small inland LNG plants that source gas from state producers PetroChina and Sinopec and supply super-chilled fuel to steel mills, glass makers and residential compounds, users that are not covered by the pipeline grid.