UPDATE 1-China Gas aims to double gas sales volume by 2015

Thu Oct 13, 2011 9:30am BST

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By Alison Lui

HONG KONG Oct 13 (Reuters) - China Gas Holdings Ltd , a natural gas distributor, expects its annual gas sales volume to almost double by 2015 and gas prices to increase, a company executive said.

Sales volume was expected to rise to 10 billion cubic metres in 2015 from 5.2 billion this year, Joint Managing Director Eric Leung told Reuters in an interview on Thursday.

The growth would be driven by the completion of China's new west-to-east natural gas pipeline, gas pipelines linking China with Kazakhstan and Myanmar, and several liquefied natural gas receiving terminals along China's coast, he said.

Leung also said he expected China to increase natural gas prices around the end of the year, narrowing the price gap with gasoline and diesel.

"The price of natural gas for vehicle use is only half that of gasoline and diesel. Chinese prices for natural gas face upward pressure," he said.

A plan to revamp the country's fuel-pricing scheme and a new scheme for the country's natural gas pricing have been submitted to the State Council, China's cabinet, for approval, an industry source with knowledge of the situation said on Wednesday.

The new natural gas pricing system could allow domestic gas prices to be pegged to international oil prices, the source said, without giving details.

China's gas imports have made up of more than 20 percent of domestic consumption in recent months, compared with none in early 2006.

The government is facing mounting pressure to lift gas prices because the cost of at least half of the current imports, sourced from Turkmenistan, were reported to be linked to crude oil prices.

Shares of China Gas, whose major shareholders include China Petroleum & Chemical Corp (Sinopec) , SK Holdings Co Ltd , Indian state gas company GAIL India Ltd and Oman Oil Co, finished up 4.2 percent on Thursday.

China Gas hoped take over the remaining 51 percent stake it does not already own in Chinese liquefied petroleum gas (LPG) distributor Panva Gas Holdings Ltd by the end of the year, Leung said.

China Gas planned to spin off its LPG business for listing by 2015, he added. (Writing by Charlie Zhu; Editing by Chris Lewis)