Reuters: China's natural gas price reform on track after fresh hike

China will raise natural gas prices for bulk buyers and non-residential use from Sept. 1, putting price reform back on track to spur domestic exploration of the cleaner fuel and curb excessive use by some industry sectors.

Beijing introduced a new pricing scheme in July 2013 to bring its domestic natural gas prices closer to the cost of imports to encourage higher domestic output and greater intake of the cleaner-burning fuel by ship and pipeline.

Top energy consumer China plans to raise its annual natural gas supply capacity to 420 billion cubic metres (bcm) by the end of the decade, an amount 2.5 times that of the country's gas demand in 2013.

The government will raise the city-gate prices for so-called existing volumes by 0.4 yuan ($0.065) per cubic metre, the National Development & Reform Commission said on Tuesday, an increase of about 18 percent and larger than the average hike of 0.26 yuan per cubic metre last year.

"It's all part of a bigger plan to lift gas prices in order to stimulate more upstream activity, which then results in more gas production, which is what Beijing really wants domestically," said Simon Powell, the Hong Kong-based head of Asia oil and gas research for CLSA. MORE