PetroChina to gain from higher Beijing gas tariffs

PetroChina, the nation's biggest natural gas supplier, will be the main beneficiary of Beijing's decision to raise non-residential gas prices nationwide by an average 15 per cent from July 10.

The biggest losers are new gas users and those that plan to increase their usage substantially this year, as the prices for this year's incremental demand will be subject to much steeper increases.

"This is significantly positive for all gas producers, most of all PetroChina," said CLSA head of Asia oil and gas research Simon Powell.

PetroChina contributed 68 per cent of the nation's gas output last year. The firm lost 42 billion yuan (HK$53 billion) last year, or 1.50 yuan per cubic metre on 28 billion cubic metres (bcm) of gas it imported at much higher prices than domestic prices.

According to a Citi research report, PetroChina may import 34 bcm of gas this year.

The price rise could mean 26 billion yuan in extra revenue on an annualised basis this year, assuming sales growth of 10 per cent and that 80 per cent of its sales are non-residential, based on calculations by the South China Morning Post. This will be offset by nine billion yuan of losses on incremental imports.