China Introduces New Pricing Scheme for Natural Gas

China has introduced on Tuesday a pilot reform on its pricing system for natural gas. The new system links prices of domestic natural gas to imported fuels.

The reform, according to the National Development and Reform Commission (NDRC), will ease up wholesale prices for unconventional gas as the country steers the sector toward a more market-guided system. Included are prices for shale gas, coal-bed methane and coal gas, NDRC noted.

NDRC said the scheme had already started in Guangdong Province and Guangxi Zhuang Autonomous Region on Monday. It said a unified price cap has been set in the two provinces, 2,740 yuan per cubic meters in Guangdong and 2,570 yuan in Guangxi.

China's demand for natural gas has grown fast. Annual consumption is projected to hit 300 billion cubic metres (bcm) by 2020 from a decade ago. Gas is China's preferred fuel as it works to limit the use of coal, culprit of most greenhouse emissions today.

The new reform will better trace and reflect market demand and resource supplies, and give basis for well-guided reasonable allocations, the NDRC said.

"The ultimate goal of the reform is to loosen the grip of the ex-factory prices and let the market take over," Cao Changqing, an NRDC official, said in Xinhua News.

NDRC said the scheme would be expanded nationwide if the pilot is successful.

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