Gas price window period reproduction

Following the announcement in February 2015 by the National Development and Reform Commission that the prices of non-residential gas stocks and incremental valve stations were on track, on August 5, the market's expectations for natural gas price adjustments were once again strong. Many market participants said in an interview with a reporter from the China Securities Journal that from the perspective of market supply and demand, encouraging clean energy consumption, and solving environmental issues, natural gas price reduction is the general trend. It is expected that the price adjustment plan will be announced in the third quarter, and the price of non-resident natural gas will be reduced. The amplitude is between 0.4-1.0 yuan/square.

If the price of gas is lowered, the development of the downstream natural gas industry will be favorable for the natural gas industry, power generation, transportation of vehicles and ships, and urban gas, etc., but it will certainly have a certain impact on upstream production and exploitation, especially the exploitation of unconventional natural gas. . How to balance upstream and downstream interests and promote natural gas prices to reflect supply and demand more reasonably will be the proposition to adjust prices at the same time.

Gas prices are expected to decline strongly

"According to the current market supply and demand situation, if you let go of the regulation, the price should be a downward trend." An oil company official pointed out to the China Securities Journal reporter.

Luo Zuo, an expert of the Petroleum Exploration and Development Research Institute of Sinopec, also believes that the global supply of natural gas is sufficient. From the perspective of solving environmental problems, natural gas, as a low-carbon energy source, is a practical means available for use in the short term. Therefore, natural gas price reduction is the trend. .

“Using the United States as an example, the effective solution to the environmental problems in the United States depends to a certain extent on the low price of natural gas. Furthermore, the country is still planning to build new industries such as natural gas, natural gas, and power generation. With so many people in China, the environmental problem is so serious. It should encourage the promotion of natural gas consumption," said Luo Zuoxian.

Anxixian senior analyst Chen Yingying pointed out that according to the import data in the first half of 2015, the natural gas price adjustment range was around RMB 1/square. However, how long the NDRC selects the pricing cycle for natural gas price adjustment will affect the final price adjustment. In addition, if the price adjustment is too large, it will cause greater pressure on the upstream companies and it is necessary to consider the upstream and downstream needs as a whole. "Considering various variables, the price adjustment we have made is expected to range from 0.3-0.5 yuan per square meter," said Chen Yingying.

Shenyin Hongyuan believes that the integration of natural gas prices in April 2015 has laid the foundation for promoting the marketization of natural gas prices. China's active adjustment of its imported energy structure and its intention to control imported energy prices also show that there is still room for downward adjustment of domestic natural gas prices. In addition, the international oil price continues to take a low pressure and lowers the international natural gas price. The downward adjustment of domestic gas prices is imperative. "We expect to reduce the space at 0.5 yuan/square. The downstream is price-sensitive. If the natural gas price is lowered by 1 yuan and 0.5 yuan, the corresponding increase in industrial demand will be 32 billion square meters and 16 billion square meters, respectively, which will significantly increase the demand for the industry."

Founder Securities believes that international crude oil prices and liquefied petroleum gas prices have fallen sharply since June 2014 and have fallen by nearly 50% in half a year. It is expected that the NDRC will have a greater probability of adopting a 10-month pricing cycle, and the price of natural gas portals should drop by about 17.03% on the basis of the price in February 2015, which is about 0.44 yuan to 0.47 yuan/party.

“At present, the situation of oversupply of natural gas in the country has basically taken shape, and the bargaining power of downstream users has increased. In addition, direct supply can be used to negotiate prices upstream and downstream. In fact, natural gas prices in some regions and industries have already been reduced,” said Chen Xiaoying.

Downstream gas companies benefit

According to industry insiders, the reduction in gas prices will firstly benefit the development of the downstream natural gas industry, and it will be beneficial to the industries such as the natural gas industry, power generation, transportation of vehicles and ships, and urban burning.

Founder Securities believes that the increase in urban gas consumption is mainly due to the increase in the penetration rate of urban natural gas and the replacement of natural gas to artificial gas and liquefied petroleum gas; the increase in industrial gas is mainly due to the addition of boiler coal to gas and hydrogen production in industrial fuels. The demand for natural gas raw materials in the chemical industry grows; the gas for transportation depends on the strength of gas station construction and the comparison of oil and gas economy.

“The reduction in non-resident incremental gas prices will bring about a decline in the cost side for the gas distribution market in the short term. At present, there is no linkage mechanism for the price of terminal gas, including residential gas, industrial and commercial gas, and the market price of gate stations has been rapidly marketed. In the background, terminal prices are much less sensitive to crude oil prices than gate stations, and city gas distributors are expected to obtain higher returns in this round of oil price declines,” said Founder Securities.

At present, city gas listed companies mainly include Shenzhen Gas, Changchun Gas, Chongqing Gas, Shannxi Natural Gas, Guoxin Energy, and Jinhong Energy.

Traffic gas industry will also benefit. According to Chen Yingying, at present there are three or four million CNG vehicles in China, and the price cut for natural gas will pass through the government's price adjustment to lower the gas cost of CNG vehicles. For LNG vehicles, the current LNG market price is already relatively low, and the elasticity may not be as large as a CNG vehicle, but it will still indirectly share the advantage of lowering domestic LNG ex-factory prices.

However, for upstream companies, the downward adjustment of gas prices will undoubtedly greatly dampen their upstream mining profits, especially the exploitation of unconventional natural gas.

“At present, the price of oil and gas is low, and the pressure on the upper reaches is relatively large. But at the national level, for the people, the welfare is created. It can be said that the upstream is a kind of “policy loss.” Luo Zuoxian said, “If The persistently low oil and gas prices are favorable for downstream petrochemicals, natural gas processing and utilization, and are beneficial to the integration of oil companies to balance their profits."

Gradually promote marketization

China's natural gas price reform began in 2011 with the "Guangzhou-Guangxi" pilot project, and was officially launched in 2013. After two years of inventory gas increase in 2013 and 2014, the incremental gas price was lowered in April this year to realize the integration of natural gas inventory gas and incremental gas prices. At the same time, pilots let go of gas prices for users.

The relevant person in charge of the National Development and Reform Commission pointed out at the time of the announcement of the price adjustment plan in early February of this year that the ultimate goal of natural gas price reform is to completely release the gas source price, and the government only supervises the prices of pipeline transportation and gas distribution prices that are naturally monopolized. The goal of the next stage is to summarize the experiences of releasing direct gas supply prices and continue to promote the construction of the natural gas trading market. In 2015, the company will establish a comprehensive gas price ladder system for residents, and at the same time improve the pricing mechanism for pipeline transportation and rationally establish pipeline transportation prices.

An oil industry analyst pointed out to the China Securities Journal reporter that the current natural gas pricing mechanism was formulated during the period of high oil prices and has not been adapted to the current speed and extent of adjustment of oil and gas prices. In the era of low oil prices, it is first necessary to adjust the current natural gas pricing mechanism.

Chen Yingying believes that if we want to modify the current pricing mechanism, we can consider the following directions: First, we can consider shortening the cycle of price adjustment, but at the same time we must also consider the cost of price adjustment; second, can we consider adjusting the substitution coefficient of alternative energy (currently 85 The third is whether the reference alternative energy (currently fuel oil and LPG) can be considered for adjustment. At the same time, taking into account other aspects of the pricing mechanism, for example, solving the problem of inversion between the price of residential gas and the price of the gate station, eliminating the cross-subsidization of residents' gas use and industrial and thermal use of gas, the industrial gas pricing tends to be rationalized; Improve the implementation methods of seasonal price difference, peak-to-valley price difference, and stop gas and gas storage price.

However, through the pricing mechanism to estimate the price of the reference portal, it still cannot effectively reflect the supply and demand of natural gas. The real marketization of natural gas prices should ultimately be determined by market supply and demand.

It is worth noting that in July 2015, the Shanghai Oil and Gas Trading Center co-funded by the “Three Major Oils” and a number of city-fired companies was formally put into trial operation. At present, the center has put into trial operation mainly pipeline trading natural gas (PNG) and liquefied natural gas (LNG) two spot trading varieties. In the future, it will also launch LNG receiving station transfer ability varieties of transactions.

The purpose of the establishment of the trading center is to realize price discovery on the one hand and determine domestic natural gas prices through market supply and demand. On the other hand, it helps China to increase its right to speak in the global natural gas market, and hopes to build a gas trading center with the United States Henry Hub in the future. NBP, a natural gas and oil trading center in Asia with international influence, is on the spot.

"The marketization of natural gas, a determination to see, and the second way. Need to coordinate the middle and lower reaches of the overall coordination, as well as change the way participants think, behavior habits. Natural gas market is not a one-time, it takes patience and time." Chen Xiaoying said.