26 Mar 2010 10:42

Poor communication between CNPC, Beijing Gas spurred gas shortages - insider

Qingdao. March 26. INTERFAX-CHINA - A communications breakdown between China National Petroleum Corp. (CNPC), the country's largest gas producer, and city gas distributor Beijing Gas Group Co. Ltd., exacerbated a country-wide gas shortage that was brought on by blizzards that struck northern China over the winter, an industry insider told told Interfax on March 25.

"CNPC fails to communicate with Beijing Gas, which is the gas distributor of Beijing Municipality, and Beijing Gas never reports the change in gas demand on time to CNPC, which makes it difficult for CNPC to allocate gas supplies to the various regions of the country," an industry insider close to the situation, who wished to remain anonymous, told Interfax.

After the shortages hit, some experts said that artificially low gas prices in the domestic market had discouraged the country's oil giants from putting enough money into developing gasfields and importing natural gas. Others have even suggested that the oil giants intentionally created the shortage to persuade the government to raise gas prices.

The industry insider said that while it is true that artificially low gas prices in the domestic market have discouraged the country's oil giants from bringing sufficient gas supplies to the market, the assumption that the shortage was the result of a deliberate effort by the oil giants is false.

CNPC's Shaanxi-Beijing gas pipeline and the second phase of West-East Gas Pipeline deliver gas to Beijing.