China’s biggest natural gas producer won a timely concession from the country’s leaders this week as Beijing announced it would raise natural gas prices for non-residents by 15% from July 10. Shares in PetroChina were up nearly 7% on Tuesday, as investment banks upgraded the company’s stock.
As we have reported before, Chinese energy companies are forced to sell oil and gas at a loss in their home country. PetroChina posted a 2.1 billion yuan ($344 million) loss on its natural gas operations for 2012 (pdf, pg.16) and similarly disappointing figures in its 2013 first quarter results. To make matters worse, a recent stock market plunge triggered by China’s ongoing liquidity crunch knocked it from its perch as the world’s sixth biggest company, falling to 12th place.
Industry specialist Platts reported in May that some local media outlets were suggesting that PetroChina restricted natural gas supplies in some areas of northern China in order to force Beijing to act, although the company denied this. The price hike is not likely to turn natural gas losses into profit, but analysts expect overall company performance to improve.