CNPC Raises Feedgas Price for Winter
CNPC, China’s predominant feedgas supplier for LNG reliquefaction plants in Northwest China, started to level up the feedgas price in mid-October, and the price has risen to RMB 1.38/cbm after two adjustments. The LNG production cost significantly rose by 17% in half a month, but LNG plants in those regions still enjoyed more lucrative sales and profits due to the pre-winter anxiety of the market. Thus, SCI believes CNPC is highly probable to continue raising the feedgas price, further pushing the market price to soar not only in the inland regions but also further spreading to the national price level.
Currently, CNPC is using the new step pricing method which was implemented from the last winter season, and the feedgas settlement price is related to the workload of LNG plants. When the operating rate of LNG plants was below 40%, between 40%-80% and above 80%, the settlement price would face a 3% premium, 5% discount and 10% discount respectively. Und under this method, the higher workloads plants maintained, the cheaper price plants enjoyed. And also, another foundation of this new method is the unlimited feedgas supply based on the sufficient piped gas sourcing from 2019. Thus, from last winter, LNG plants chose to run at high workloads, even facing some profit losses in summer, and China’s LNG plant supply jumped to 46,000 mt/day level in the first three quarters of 2020 from 34,000 mt/day level in the same period of 2019, up 35% Y-O-Y.
