The fact first gas to Shanghai will cost 45% higher than natural gas piped from the East China Sea or shipped from Australia and other sources has only fuelled the flames.
Gas from the pipeline has been set at 1.32 yuan (US$0.16) per cubic metre with end-users being charged 1.46 yuan (US$0.18) per cubic metre. Rival firm CNOOC’s East China Sea gas is being sold at 0.88 yuan (US$0.11) per cubic metre to end-users.
According to Beijing University academic Li Fuyong, “The pipeline’s main goal [is] boosting economic growth in China’s undeveloped western regions, with gas price considerations secondary.”
“The pipeline [is] a commercial project with characteristics of the command economy that is aimed at favouring domestic endeavours, no matter how inefficient or costly, over international ones,” he added.
PetroChina, despite rumours of customers delaying the signing of gas contracts, is confident of users for its Xinjiang gas.
“The surging demand for a stable energy supply, especially for clean energy, as well as rising global oil and coal prices have sharpened the West-East project’s edge,” said the firm.
“Currently, it is not that the pipeline is waiting for the market, rather it is more that the markets are waiting for the pipeline to enter,” it added.
