Domestic Petrochemical Giants Expand Their Armaments To Prepare For &Nbsp, And Deal With Natural Gas Price Rise.

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As a result, CNOOC plans to expand coal to natural gas.

Analysts believe that the rising price of natural gas has increased the huge profit margins of coal to natural gas and coal-bed methane. Because of objective reasons, the two giants finally chose different main directions.

However, the domestic coal-bed methane has been put into commercial operation before the coal and natural gas is put into operation. Although the two are restricted by the pricing of natural gas and the cost of pipeline pportation, the final benefit of coal-bed methane which is not affected by the cost of coal will probably be higher than that of coal derived natural gas.

Two giants fight hard "two gas"

While listed companies are involved in shale gas, CNOOC has made strategic planning on coal natural gas.

CNOOC plans to build an annual output of 10 billion cubic meters of coal natural gas project in Shanxi in the next 5 years.

Among them, the first phase of the project has been determined by CNOOC new energy investment company and Shanxi's largest coal enterprise with coal group joint venture.

The cooperation project will cost about 30 billion yuan, of which the core investment is 21 billion ~240 billion yuan.

The project will build an annual output of 4 billion cubic meters of coal natural gas, build 20 million tons of coal mines, 300 thousand tons of liquefied natural gas, IGCC power generation and comprehensive utilization of power generation, chemical products and so on.

In addition, CNOOC is building a coal and natural gas project in Ordos, Inner Mongolia, and plans to supply gas in 2015.

"Daily economic news" found that the planned output of CNOOC coal natural gas has been directly related to the domestic CBM boss, PetroChina.

General manager of PetroChina coalbed methane Co., Ltd., Ming Ming, told this newspaper that in 2013, PetroChina will build a production capacity of 4 billion 500 million cubic meters, and the output will reach 4 billion 500 million cubic meters in 2015, and the volume of commodities will be 4 billion cubic meters, accounting for more than 40% of the total proportion of the whole country.

In the production of natural gas, why did the two giants choose different main directions? Li Hong, an analyst of China chemical network, believes that CNOOC does not have blocks for coal-bed methane exploitation and lacks resources, so it chooses coal to natural gas in the field of coal chemical industry, while PetroChina has previously taken the cooperation franchise of 50% CBM blocks with the Zhonglian coal seam company "separation" and has the resource advantage.

Obviously, the two giants hope to seize more domestic market share by expanding the sources of natural gas.

To this end, CNOOC has planned a coal natural gas pipeline across the four provinces and municipalities of Mongolia, Jin, Hebei and Tianjin, with an annual gas pmission volume of 15 billion cubic meters. By 2015, the gas pipeline will reach the maximum contract gas supply volume of 15 billion cubic meters.

By then, coal to natural gas will go directly to the important market around Bohai.

The way to use CBM is to enter the west east gas pipeline.

It is reported that Shanxi Qinshui has been built to the west east gas pipeline gas pipeline, the annual gas pmission capacity of 1 billion cubic meters.

At present, the commercial gas supply to the west east gas pipeline exceeds 100 million cubic meters.

This year, PetroChina's total sales of coal-bed methane are estimated to reach 600 million cubic meters.

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Natural gas price increases highlight profit margins

The background of CNOOC and CNPC's massive coal to natural gas and coal-bed methane is the call for rising prices and prices of domestic natural gas. Meanwhile, domestic gas supply gap has also contributed to the development of coal natural gas and coal-bed methane development.

At 0:00 on June 1st, the NDRC raised the benchmark price of domestic natural gas on the land, so the price of natural gas terminal also began to rise.

Beijing's non resident natural gas prices, natural gas and central heating prices in Xining increased in September 28th. Shenyang, Hefei, Changsha and other cities across the country are holding hearings to prepare for price increases.

Zhang Fang, director of the fine chemicals division of the petroleum and Chemical Industry Planning Institute, said that the economy of coal based natural gas has been initially feasible.

There will be room for further increase in natural gas prices, and the benefits of coal to natural gas will also increase.

"Domestic gas prices will have to be in line with international standards in the future, so that domestic gas prices can be doubled, and only 50% of the price of coal natural gas will increase."

Zhang Fang said.

According to Zheng Chunlin, a consultancy analyst at asihua, the output price of coal natural gas can be profitable at around 1.2 yuan, and if the amount reaches 1.8 yuan, the rate of return on capital will be very substantial.

At present, the lowest domestic gas export price determined by the NDRC is 0.79 yuan / cubic meter, with a maximum of 1.61 yuan / cubic meter.

Unlike coal to natural gas, coal-bed methane has been put into commercial operation in China.

"CBM price is determined by the supply and demand sides according to the principle of market economy, and the state does not limit the price."

"The company mainly sets the price of natural gas, which is basically flat or slightly higher than the price of natural gas," he said.

It is reported that the price of coal-bed gas will rise correspondingly after the increase of natural gas price.

In addition, the government has introduced a series of financial subsidies, tax relief and other incentive policies.

Coal bed gas efficiency is higher than coal natural gas.

As for the superiority comparison of the two types of natural gas, Zhang Fang thinks that the biggest obstacle to coal natural gas is the price of natural gas, and the domestic price is far below the international market price.

Besides price, there are pipelines and seasonal problems. Pipelines should rely on existing pipelines.

Billions of cubic meters of feeder lines, and pipelines that are within a few hundred kilometers, can also be invested in tens of billions of dollars, and it can be sustained. The investment of pipelines like thousands of kilometers or tens of billions of yuan is too big.

It is understood that the CNOOC planned coal gas pipeline total length of about 1538 km, with a total investment of about 16 billion 800 million yuan, is expected to start construction from 2010 to 2012, completed before January 2013.

Li Hong believes that since the coal based natural gas has not yet entered commercial operation, it is difficult to compare with the economic benefits of coal-bed methane. Both of them are currently facing the same constraints as pportation pipeline and natural gas pricing. "If coal derived natural gas can enter the west east gas pipeline network, it will be 0.5 yuan less than the breath rate, ~1 yuan, but it is more expensive than domestic gas production."

Li Hong said.

However, Zhang said that the cost of coal to natural gas is directly related to the price of coal, and the cost is different under different coal prices.

In contrast, Li Hong believes that coal-bed methane is not affected by the price of coal, so the cost of coal-bed methane is lower than that of coal to natural gas.