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NEWS

PetroChina to boost Central Asia gas imports by half

23 May 2012

http://www.reuters.com of 5/23/2012 - PetroChina will boost its natural gas purchases from Central Asia by as much as half this year even as it is unable to fully pass on import costs to consumers due to state price controls, the country's largest energy company said.

The Hong Kong-listed unit of state-owned China National Petroleum Corp is tasked to import natural gas via pipeline from Central Asia to help the government achieve its goal of doubling the share of the less polluting fuel in the country's overall energy mix by 2020.

PetroChina, Asia's biggest company by market value, will raise imports to as much as 25 billion cubic metres (bcm) this year from 15.9 bcm in 2011, Chairman Jiang Jiemin said at an annual company gathering in Beijing on Wednesday.

Imports will reach the full capacity of China's cross-border pipeline of 30 bcm next year, he said.

The Chinese government controls prices of natural gas, oil and electricity to tame inflation, and selling Central Asian gas below cost has eroded PetroChina's earnings.

"Natural gas posted heavy losses in the first quarter compared with last year. The reason is clear -- the increased natural gas imports from Central Asia," said Jiang.

Like the situation in oil refining, the outlook for the natural gas segment will largely remain unchanged in the second quarter, he said.

Construction of a third cross-country gas pipeline may begin this year and the project may be completed in two to three years, Jiang told a media briefing in Beijing.

PetroChina, in its efforts to extract gas from unconventional sources, will prioritise development of gas trapped in hard rock and between layers of coal over gas locked in shale formations, Vice Chairman Zhou Jiping told reporters.

PetroChina has developed its own technology to extract so-called tight gas and coal-bed methane, while the key technology to develop shale gas is still in the United States, Zhou said.

Also, China's geology is different from America's, so technological innovation is needed to spur China's shale gas development, Zhou added.

PetroChina is also studying refinery projects in the Caribbean and opportunities in South America and North America, Jiang said, without elaborating.

Sources told Reuters that PetroChina was in talks to buy Valero Energy's 235,000 barrel-per-day refinery in Aruba, an island in the southern Caribbean Sea. (Editing by Ryan Woo)