08:45, November 25, 2009
Chinese cities are grappling for a second week with the most serious natural gas shortage in nearly a decade, triggered by unusually early winter weather, and the nation's top economic planner is urging suppliers to meet maximum distribution rates to meet the demand.
Energy analysts, while giving various explanations for the squeeze, including low gas prices, an insufficient storage system and a monopolistic market, are split over whether a price adjustment would serve as a viable solution.
The shortfalls began this month when early, heavy snow hit northern China, sending heating demand up and forcing supplies in southern China to be diverted north. The cold spell then hit the south, compounding the demand problem and slowing supplies.
The surging demand for gas has subsequently caused a gas shortage in China's central and eastern regions, and the government is taking emergency measures to tackle the issue, Zhang Guobao, vice minister of the National Development and Reform Commission (NDRC) and director of the energy bureau, said Monday.
"The gas suppliers should try their best to extend the production potential, use storage resources and increase imports to ensure the supply," he said.
An additional 1 billion cubic meters of gas is needed, despite the west-to-east transmission of 17 billion cubic meters of natural gas, Zhang said, adding that tight gas supplies had started to gradually ease across the country. But some say the situation could get worse.
As demand peaks in December and January, daily gas shortages are expected to reach 8 million cubic meters in northern China and up to 6 million cubic meters in the south, China Petroleum Daily, an in-house newspaper of China National Petroleum Cooperation (CNPC), said Tuesday, sending a different message than that of the government.
The gas shortage for buses reached 30,000 cubic meters per day in Zhengzhou, capital city of Henan Province, and sometimes more than a hundred buses could be seen in long lines at gas stations, Zhengzhou's Orient Today reported Monday.
"It took half an hour to wait for a bus recently; normally it's 10 minutes at most," a local man surnamed Ma was quoted by the paper as saying.
The government decided to cut supplies to taxis from Monday to ensure the operation of gas-fueled buses, which
account for nearly a half of 4,300 buses in the city. Zhengzhou Gas Group said the city is facing a shortage of 50 million cubic meters of natural gas this year.
The normal gas supply in downtown Hangzhou, Zhejiang Province, can be maintained until today after it resumed Sunday, local authorities said, though future supply remains uncertain.
In order to ensure household usage, 44 industrial plants were cut off from their gas supply, and six had been limited in consumption by last week, forcing many of them to shut down.
Some cities in central and southern China, including Jiangsu, Shandong and Shanxi, are also facing severe gas shortages this winter.
According to the BP Statistical Review 2009, China's natural gas output in 2008 was 76.1 billion cubic meters, as compared with its consumption of 80.7 billion cubic meters in the same year. It said the country's natural gas consumption has been rising at over 20 percent annually in the past few years.
Gas shortages began to haunt southern cities in 2004.
Dong Xiucheng of the China University of Petroleum attributed the gas shortage to the lack of a gas-reserve mechanism, noting that China doesn't have any major gas storages in case of emergencies.
"Only several major oil suppliers dominate the production and transportation. The gas-supply pipelines are scattered around the nation without necessarily overlapping. Mobilization of resources therefore becomes very difficult," Dong said.
The thinking was echoed by Han Xiaoping, chief executive officer of china5e.net, a professional energy website. He suggested that a monopolized gas market comprising PetroChina, Sinopec and CNOOC should bear the blame.
"Without competition, these sole players lack inner impetus to invest in exportation and technology development, as the price is controlled by the State," he said. "China is not short of natural gas resources, but it lacks sufficient exploration and utilization."
Change the price?
Xu Kai, a CCTV commentator, suspected that the oil giants were curtailing the market supply to obtain a higher price, but they have denied such accusations and said they are at full capacity.
Daily gas output of PetroChina, the country's largest oil and gas producer, reached 182 million cubic meters from November 1-20, up 22 percent over the same time last year.
Sinopec, China's second-largest oil and gas producer, has beefed up natural gas production and cut its own consumption to meet residential needs amid a national supply shortage, the China Petrochemical News reported Tuesday.
Cao Changqing, head of the pricing department of the NDRC, said that the price of natural gas won't change by the end of this year. He did not elaborate.
Liu Ming, a deputy researcher of world industrial structures at the Chinese Academy of Social Sciences, noted that authorities are focusing on energy conservation, as it keeps on diversifying and increasing energy production, and the pricing mechanism is one of the most significant measures under the circumstances to ensure an energy balance.
"People seem to have gotten used to cheap energy consumption," Liu said. "But they have to understand that the price of natural gas is bound to grow."
Han Xiaoping, the energy expert, however, said that the gas price should not be under the control of the State.
"In an open market with many competitors, the gas price adjusts itself to a level according to market demand," Han said.
China last revamped its gas pricing at the end of 2005, linking the clean fuel with alternative fuels such as coal and crude, but the government has only raised prices twice since.
It remains to be seen whether it will happen again soon.
Source: Global Times
Review: http://english.people.com.cn/90001/90778/90862/6822929.html
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