The battle continues between CNPC and Shaanxi LNG plants on the price increase for natural gas.

PetroChina Changqing Oilfield Company, a subsidiary of the state-run China National Petroleum Corp (CNPC), has suspended or restricted natural gas supply to four LNG plants in northwest China’s Shaanxi province after they protested against a price hike for natural gas offered by the state oil giant.

Nine LNG factories in Shaanxi province launched a boycott last month on PetroChina’s  natural gas supply, threatening to shut down their operations and cut LNG distribution following PetroChina’s decision to raise the price to 1.95 yuan (US$0.30) per cubic meter for stock gas and 2.48 yuan (US$0.40) for incremental gas, about 31 percent up.

The factories refused to pay for the gas sold at new price, claiming the price hike is “unreasonable”, adding that PetroChina has arbitrarily raised gas price three times since last November without consulting them, in violation of a price negotiation order by the National Development and Reform Commission.

As a result, Changqing oilfield halted gas supply to Shaanxi Luyuan Zizhou LNG factory and cut the supply amounts for Ansai Huayou Natural Gas Company, Shaanxi Zhongyuan Green Energy Natural Gas Company and Jingbian Xilan Natural Gas Co., citing a wintertime gas consumption peak.

Shaanxi provincial government is approaching CNPC to solve the dispute after receiving appeals from the LNG plants, yet no agreement has been reached between the two parties. CNPC provides 85 percent of natural gas in China market.

“It is inevitable that we will be forced to accept the price hike eventually because CNPC is the only gas supplier to us,” one LNG plant owner said.


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