11 Jun 2010 11:33

Rise in gas prices to benefit SNG projects - analyst

Shanghai. June 11. INTERFAX-CHINA - The rise in China's natural gas prices is expected to benefit synthetic natural gas (SNG) projects, an energy and chemical analyst wrote in a research report on June 11.

Bill Zheng of ASIACHEM Consulting Co. Ltd. said that since domestic natural gas prices are expected to continue rising in the long run, coal-based chemical projects, such as SNG, will profit as a result. Zheng also noted that the price hike is also favorable for the country's major natural gas producers.

China raised the ex-work price of natural gas on June 1 by RMB 230 ($33.67) per thousand cubic meters, representing a 25 percent increase. In turn, Zheng estimates that SNG projects will able to withstand coal price hikes of RMB 125 ($18.30).

China Datang Corp., the country's leading power producer, recently kicked off construction of two SNG projects in northeastern Liaoning Province and Inner Mongolia Autonomous Region with a total annual gas output of 8 billion cubic meters.

By 2020, China is expected to have a total of 15 SNG projects in operation with an annual gas output of 25 billion cubic meters.