State-owned PetroChina lost some Yuan 49 billion ($7.9 billion) last year importing natural gas from foreign suppliers and selling it at lower domestic prices in China, the company revealed Thursday when it released its 2013 financial results.
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PetroChina is responsible for all of China's pipeline gas imports and also buys a significant amount of LNG. It commissioned its third LNG import terminal at Tangshan in Hebei province in November last year.
The company said it lost a total Yuan 28.3 billion on sales of 27.45 billion cubic meters of gas imported from Central Asia, while the total loss on sales of 409 million cu m of gas from Myanmar was about Yuan 420 million.
Gas from Central Asia mostly comes from Turkmenistan and it enters China in western Xinjiang province and is distributed via PetroChina's Second West East pipeline that runs across China to the eastern coast.
PetroChina only started importing gas from Myanmar from the second half of last year, via a pipeline running across the Southeast Asian country and meeting PetroChina's grid in southern Yunnan province.
This means the company's loss on its gas pipeline imports averaged Yuan 1.03/ cu m last year.
It made a loss of Yuan 20.3 billion through selling a total 7.34 billion cu m of imported LNG last year, suggesting the average loss was Yuan 2.77/cu m of LNG.
PetroChina said it received some reprieve via a government rebate on the value-added tax for imported gas, and this narrowed its loss on imported gas sales to Yuan 41.9 billion, largely similar to the loss last year.
PetroChina's gas imports accounted for about two-thirds of China's total gas imports last year.
Speaking at a press conference in Hong Kong, company chairman Zhou Jiping reiterated the need for further natural gas pricing reform.
"A rational price is the key to further development of the natural gas sector, particularly as the world is now entering the age of natural gas development and utilization," he said.
The Chinese government controls domestic prices of natural gas and sets benchmark prices for various provinces and cities based on supply, demand and affordability of end users.
Beijing last raised gas prices for non-residential users by over 15% in July, bringing the average citygate gas price across the country to Yuan 1.95/cu m.
Zhou said the company also welcomed the government's plan to open gas pipeline and related infrastructure up to third-party access.
The National Energy Administration had mooted the idea last year and recently issued more detailed guidelines on the policy. The aim is to encourage efficient use of resources and allow private players, particularly upstream operators, to access pipelines owned by PetroChina and other state-owned companies, in order to bring their gas resources to market.
"We will remain committed to creating favorable opportunities for third parties to transmit their resources through our pipelines, including coal-gasification products to increase gas supplies to market," Zhou said, adding that this would be conducive to increasing overall stable gas supplies in the country.