China’s two big oil majors urge tax breaks for building gas storage and imports

A Sinopec worker walks past liquefied natural gas (LNG) storage tanks at an LNG terminal in Tianjin. (REUTERS)
Updated 08 March 2018
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China’s two big oil majors urge tax breaks for building gas storage and imports

BEIJING: Top officials from China’s two largest oil and gas producers have urged the government to offer tax breaks for the building of gas storage facilities and importing liquefied natural gas (LNG) to help avoid another gas crunch in the winter ahead.
Sinopec Vice President Ma Yongsheng said the central government should subsidize the construction of underground gas storage, LNG tanks and other facilities.
China National Petroleum Corp. (CNPC) President Wang Yilin urged the government to refund value added tax on LNG imports to lower gas costs for consumers.
Members of parliament and the Chinese People’s Political Consultative Conference, the Communist Party’s largely ceremonial advisory body, are encouraged to submit suggestions for future legislation during the current Parliament session.
Their chances of becoming legislation are minimal, but they can form part of future laws.
The proposals from Sinopec and CNPC come as the nation looks for ways to increase storage capacity for natural gas to avoid a repeat of this past winter’s heating crisis.
Millions of households in northern China switched from using coal to natural gas for heating before this winter, leading to rocketing gas consumption as well shortages across many regions.
The fuel shortages over the last three or four months deepened China’s worries over whether it can secure enough gas and LNG supplies in the winters ahead.
CNPC’s Wang said China’s gas demand will grow 15 percent to 16 percent in 2018 and supplies will continue to be tight, according to a transcript of his speech to a parliament meeting session published in CNPC’s official newspaper.
Sinopec’s Kong Fanqun, who heads the Shengli Oil field said a lack of storage facilities also contributed to China’s gas shortages this winter, according to a transcript of his speech sent to Reuters by the Sinopec Group.
The country needs an additional 50 billion cubic meters (bcm) of storage facilities by 2020 to meet its own demand, Kong said. That is five times the size of China’s current gas storage facilities.
Kong asked the government to give gas producers subsidies as well tax breaks to build and operate gas storage facilities.
Both Sinopec and CNPC officials also proposed removing resource taxes on the development of shale gas, coalbed methane, high sulfur gas and tight gas reserves.


‘Get prices down’ Trump tells OPEC

Updated 20 September 2018
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‘Get prices down’ Trump tells OPEC

  • Trump highlights US security role in region
  • Comments come ahead of oil producers meeting in Algeria

LONDON: US president Donald Trump urged OPEC to lower crude prices on Thursday while reminding Mideast oil exporters of US security support.
He made his remarks on Twitter ahead of a keenly awaited meeting of OPEC countries and its allies in Algiers this weekend as pressure mounts on them to prevent a spike in prices caused by the reimposition of oil sanctions on Iran.
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!” he tweeted.
“We will remember. The OPEC monopoly must get prices down now!”
Despite the threat, the group and its allies are unlikely to agree to an official increase in output, Reuters reported on Thursday, citing OPEC sources.
In June they agreed to increase production by about one million barrels per day (bpd). That decision was was spurred by a recovery in oil prices, in part caused by OPEC and its partners agreeing to lower production since 2017.
Known as OPEC+, the group of oil producers which includes Russia are due to meet on Sunday in Algiers to look at how to allocate the additional one million bpd within its quote a framework.
OPEC sources told Reuters that there was no immediate plan for any official action as such a move would require OPEC to hold what it calls an extraordinary meeting, which is not on the table.
Oil prices slipped after Trumps remarks, with Brent crude shedding 40 cents to $79 a barrel in early afternoon trade in London while US light crude was unchanged at about $71.12.
Brent had been trading at around $80 on expectations that global supplies would come under pressure from the introduction of US sanctions on Iranian crude exports on Nov. 4.
Some countries has already started to halt imports from Tehran ahead of that deadline, leading analysts to speculate about how much spare capacity there is in the Middle East to compensate for the loss of Iranian exports as well as how much of that spare capacity can be easily brought online after years of under-investment in the industry.
Analysts expect oil to trend higher and through the $80 barrier as the deadline for US sanctions approaches.
“Brent is definitely fighting the $80 line, wanting to break above,” said SEB Markets chief commodities analyst Bjarne Schieldrop, Reuters reported. “But this is likely going to break very soon.”