Beijing Decides to Implement Subsidy to LNG Storage Projects

China’s top economic planning authority NDRC recently announced publicly to implement subsidy to natural gas emergency storage projects in North China by up to 30% of the investment or CNY 2,500/cbm of the capacity.

The decision had been made in early June, but the official notice had just been published to provincial governments and NDRC’s subsidiaries. The subsidy covers the so-called 2+26 cities area in North China to help local governments to build up the 3-day level natural gas emergency storage capacity and face the upcoming harsh winter heating season with a foreseeable supply shortage in this area.

However, the beneficiary of the subsidy did not include LNG reliquefaction plants, regasification plants, CNG or LNG filling stations, PNG-, CTG- and syngas-based storage, etc. Meanwhile, the subsidy may not be used on completed projects in principle, and only newly built or expanded LNG storage projects may benefit from this policy.

To remind, in a statement of NDRC in April, it was specially stipulated that the gas operators (CNPC, CNOOCand Sinopec) shall retain the basic storage capacity over 10% of the contractual sales volume, the city gas companies shall retain over 5% of the annual consumption volume, and local governments shall retain the natural gas emergency storage no less than 3-day average consumption volume of the administrative area.