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China seeks to avoid another Beijing freeze

Four major domestic gasfields are producing at peak capacities to secure supplies as a cold front arrives

Gulf News

HONG KONG: China National Petroleum Corp, the country’s biggest natural gas producer and importer, stepped up production and transportation of the fuel as winter comes, seeking to avoid bottlenecks that choked Beijing’s gas last year.

Four major domestic gasfields — Daqing, Changqing, Sichuan and Xinjiang — are producing at peak capacities to secure supplies as a cold front that could lower temperatures by as much as 16 degrees Celsius (61 degrees Fahrenheit) arrives, the state-owned company said in a statement on its website Thursday. Nationwide gas sales rose 9 per cent from a year ago to 480 million cubic meters on November 22, according to the statement.

CNPC plans to increase natural gas supplies by 7 per cent during the peak-heating season as China is forecast to experience the coldest winter since 2012. The company’s liquefied natural gas terminal in Tangshan is scheduled to receive 25 cargoes in winter and send 2.76 billion cubic meters of natural gas to nearby markets, including Beijing.

“No doubt CNPC is trying to avoid the same kind of embarrassment that happened last winter in Beijing,” said Laban Yu, head of Asia oil and gas equities at Jefferies Group LLC in Hong Kong. The company wants “to assure people it’s part of the solution, not part of the problem.”

PetroChina Co., CNPC’s flagship listed unit, advanced 0.6 per cent to HK$5.38 as of 10.05am in Hong Kong. The city’s benchmark Hang Seng Index added 0.5 per cent.

Last winter Beijing ordered heating to be cut to a low of 14 degrees Celsius on a gas supply shortage, which CNPC said was caused by heavy fog and wind that delayed the unloading of tankers carrying LNG in Tangshan. The National Development and Reform Commission, China’s price regulator and economic planner, in October urged major natural gas suppliers including CNPC to implement plans to increase supply.

China’s winter-supply bottleneck is a pressing issue and is caused mainly by the lack of gas storage facilities, said Yu. Producing more in winter and less in summer from fields carries the risks of higher cost and lower efficiency, he said.

“To solve the problem once and for all, CNPC and other producers need to build more gas storage facilities at least in the northern part of the country and become capable of stocking up and releasing a large quantity of gas based on changes in demand,” Yu said.