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Chinese cities, including Shanghai, will follow Beijing's move to raise household natural gas prices to move them closer to those of oil, and there are likely to be more increases, officials from PetroChina Co, said on Wednesday.

 

Beijing lifted household gas price by 0.15 yuan to 2.05 yuan (27 US cents) per cubic meter over the weekend. This will translate into households paying an additional monthly fee of some 2.7 yuan each, local media estimated.

 

Even so, domestic gas prices are only 30 percent of those for oil for producing the same amount of heat, according to Li Jingming, a vice president of the exploration research institute at PetroChina, China's largest oil and gas producer.

 

"So China must increase domestic prices to catch up with the world level," Li said. "Otherwise, lower prices will cause wastes and affect imports."

 

Gas accounts for about 2.5 percent of China's primary energy consumption, against the global average of 23 percent, Li said. China has to import some gas to meet its demand for the cleaner burning fuel.

 

He said China is studying building pipelines to import cheap gas from countries like Myanmar.

 

Bai Lanjun, an economist at PetroChina's gas research unit, said he has learnt from the company headquarters and the National Development and Reform Commission that the gas prices will also rise in other cities soon.

 

"Concerning inflation and low-incomers, the rise in gas prices will happen several times rather than being a one-off move," Bai said.

 

Shanghai and other cities have yet to announce how much gas prices will rise. But the local price authority has held a hearing last year on creating a flexible pricing mechanism for natural gas.

 

The trend is that domestic gas prices will move towards global level and follow oil rates, Liu said.

 

(Shanghai Daily April 5, 2007)