China orders stronger regulation of natural gas pricing as demand surges

BEIJING -- China's top economic planner on Tuesday ordered local authorities to strengthen regulation on the pricing of heating and natural gas during upcoming holidays as demand surged.

The National Development and Reform Commission (NDRC) said in a statement that the heating prices for households converting from coal to gas should be regulated more strictly during the New Year and the Spring Festival.

Authorities should punish those who fabricate and spread information on price hikes, engage in price rigging and fixing, or make arbitrary charges for installing heating equipment, the NDRC said.

The move came amid surging natural gas demand in China as millions of households switched to gas from coal for heating this winter to help combat air pollution.

The country's natural gas consumption rose 18.9 percent year on year in the January-November period, 12 percentage points higher than that in the first half and more than 8 percentage points higher than the average growth in the previous five years, according to NDRC data.

North China's Hebei Province has activated a second-level alert for natural gas supply, indicating that the province's natural gas supply is 10 to 20 percent lower than its total demand.

China's major state-owned oil firms have been told to maximize production at domestic gas fields. An NDRC spokesperson said Monday that gas supply for industrial use will be reduced moderately to better meet household demand.

Xu Bo, a senior analyst with China National Petroleum Corporation's Economics and Technology Research Institute, estimated that natural gas use is expected to reach 230 billion cubic meters this year, with 20 billion cubic meters coming from the coal-to-gas transition.

Xu projected a growth rate of 17 percent for natural gas consumption this year, compared with 7 percent last year.