Southwest natural gas prices raise anxiety

Recently, the news of natural gas price adjustment in southwest China triggered anxiety.

“If the price adjustment plan is fully promoted, in addition to PetroChina and Sinopec’s subsidiaries, the gas head chemical and fertilizer companies in southwestern China will face the risk of total losses or even stop production.” The news was issued on June 16 by the Sichuan Provincial Development and Reform Commission. Notice of Southwest Oil and Gas Field Company's Outsourcing of Natural Gas Sales Price and Related Issues, Notice Decided that from June 1st onwards, new industrial and chemical fertilizer gas should be settled at the price of purchased gas; existing users of chemical fertilizers, chemicals, etc. The volume of gas planned for the year is used as the base, and the amount of gas used within the scope of the annual plan is all allocated for the share of outsourced gas at the rate of 16%. The volume of gas used for the project of the Yearbook is all set at the price of purchased gas. Subsequently, Chongqing, Yunnan, and Guizhou also decided to adjust natural gas prices in light of Sichuan's practices. A gas-capitalized fertilizer company manager said that after the implementation of the New Deal, a set of fertilizer plants with an annual output of 520,000 tons of urea will add up to 100 million yuan a year.

According to reports, the price of gas used in the fertilizer program in Southwest China is 0.92 to 1.29 yuan per cubic meter, and the price of industrial gas is 1.9 yuan per cubic meter (the price of straight gas supply is 1.7 yuan). Once the New Deal is implemented, the full cost of ton of urea will exceed 2,200 yuan.