Letter from China: Price controls squeeze gas suppliers

Incomplete price reforms pose problems for both upstream and downstream players and threaten further shortages

Ten years after they began, unfinished reforms to gas pricing in China have pitched the country’s state-controlled upstream producers against downstream city gas suppliers, within a complicated system that is slow to reflect changes in international prices. Chinese utilities such as China Gas Holdings, Kunlun Energy and ENN Energy buy most of the gas they sell from NOCs Petrochina, Sinopec and Cnooc. Towards the end of every March, the NOCs and utilities sign sales contracts that cover supply for the next 12 months, including the summer and winter peak demand seasons, when consumption spikes for cooling and heating purposes respectively. Petrochina has suffered multibillion-dollar loss