The National Development and Reform Com mission, China's top economic planner, announced on Monday it is to raise the domestic onshore natural gas producer benchmark price b y RMB0.23 yuan/cubic meter.
The natural gas price rise comes after long expectations of reform to the country's natural gas pricing system and is being viewed as China's first step for such reform. According to NDRC's statement, the prices will be raised by 24.9 percent on average, far beyond the market expectations of 10 to 20 percent. The NDRC raised the natural gas price in order to boost energy conservation and provide a guide to the reasonable allocation of natural g as resources.
China's natural gas price has been at a low level, while the supply of natural gas has been tight. Liang Zuojian, deputy secretary general of the China Gas Association, said that China's natural gas supply shortage would reach 30 billion cubic meters this year.
Analysts believe that the low natural gas price has been dampened g as suppliers' investment initiatives and in turn aggravate the tight gas supply. In 2009, China's natural gas output reached 85.17 billion cubic meters, while the consumption totaled 88.7 billion cubic meters, with a supply shortage of 3 billion cubic meters.