Far East Energy Hikes Gas Price
Far East Energy Corporation, which operates the Shouyang coal bed methane (CBM) block in Shanxi province of China, on Monday announced 42% hike in its gas sales price.
Effective January 1, 2014, company’s contracted base gas sales price for its 20-year take-or-pay contract with Shanxi Provincial Guoxin (SPG) will be RMB 1.7/m3, equivalent to $7.90/Mcf compared with current price of RMB 1.2/m3 ($5.58/Mcf).
“Because CBM prices are negotiated outside the state pricing regime, management believes that this increase highlights the rising and strong demand for natural gas from Shanxi province as it seeks to add more gas into its energy mix,” Far East Energy said.
In addition to the increased base price, the current subsidies of 0.25 RMB/m3 will mean a total price of $9.07/Mcf for gas production in 2014, the company added.
“If previous pronouncements made by various government sources to the effect that there will be an increase in the subsidy to a total of RMB 0.65/m3 are implemented, Far East Energy’s price will then rise to approximately $10.93/Mcf; or, a 62% increase on current gas pricing based on the current RMB/USD exchange rate,” Far East further said.
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