December 29, 2017 / 7:17 AM / in 3 months

FACTBOX-China's Chongqing and Shanghai natural gas exchanges

BEIJING, Dec 29 (Reuters) - China will launch a new natural gas trading exchange in Chongqing in early 2018, rival to a similar project in Shanghai. Beijing hopes at least one of the schemes will develop into a benchmark to price gas supplies across Asia.

The Shanghai exchange is trading wholesale pipeline gas denominated in yuan per cubic metre and liquefied natural gas (LNG) in yuan per tonne.

Chongqing is to announce product and contract details in the first half of next year. The exchanges are initially open only to domestic investors, but both plan to allow foreign participation eventually.


Launched in early 2015 with a registered capital of one billion yuan ($150 million), the Shanghai exchange is backed by state news agency Xinhua; China’s top three state oil majors Sinopec, China National Petroleum Corp (CNPC) and CNOOC; and five gas distributors, including China Gas Holdings, ENN Group and state-run utility Huaneng Group.

Xinhua is the largest investor with a 33 percent stake.

Trade has been thin since the start-up two years ago, although liquidity picked up from this past September, ahead of a severe supply crunch in China this winter. Turnover on the exchange for 2017 is expected to top 50 billion cubic metres.

By comparison, 100 bcm to 200 bcm per month are typically traded on Britain’s NBP, according to UK regulator Ofgem.

Shanghai sits at the receiving end of two national trunk-lines, one that starts in the remote northwest region of Xinjiang and the other from southwest Sichuan. Shanghai is also on China’s east coast, which is dotted with about 15 LNG receiving terminals.


Registered in July with one billion yuan in capital, the exchange gathers 13 investors, with Chongqing Energy Investment Group and state majors CNPC and Sinopec making up the core group, each holding a 13 percent stake.

Other smaller investors among the 10 remaining stakeholders, include private gas distributors China Gas Holdings, ENN Group, Hanas Group, regional government-backed Hubei Energy Group and Shanxi Yanchang Petroleum.

CITIC Securities and state-owned fertilizer and chemicals maker Chongqing Chemical and Pharmaceutical Holding Group are also among the investors.

The exchange plans for first trades of pipeline gas and LNG in the first half of 2018.

Chongqing is located in China’s most prolific Sichuan gas basin and home to the country’s largest shale gas development.

Chongqing’s regional grid is connected to pipelines bringing in gas from Myanmar and Central Asia.

The exchange signed a non-binding agreement in November with Delfin Midstream to jointly develop a gas trading platform.

$1 = 6.5430 Chinese yuan Reporting by Chen Aizhu; Editing by Tom Hogue

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