China National Petroleum Corporation clarified: the long-term gas purchase is not a one-time expenditure, and the main reason for the loss is to absorb costs and stabilize prices.
In response to media reports that CNPC turned to the United States to purchase gas, resulting in losses, CNPC solemnly clarified that this was not true, emphasizing that the contract would be paid in installments over years.
Quick Look
- In response to media reports that PetroChina suffered losses due to long-term gas purchase contracts, PetroChina clarified today (23rd) that the gas purchase contracts were paid in installments over years and were not a one-time expenditure.
- The main reason for the loss is to absorb costs in order to stabilize domestic oil and gas prices, and the procurement strategy is to diversify risks and not rely solely on the United States.
AI-generated summary
Why It Matters
In recent years, due to fluctuations in international oil and gas prices, CNPC has absorbed costs in order to stabilize domestic prices, resulting in six consecutive years of losses. The company adopts a risk diversification strategy, with gas sources coming from 14 countries around the world.
China Petroleum Building. (Provided by CNPC)
[Reporter Liao Jianing/Report from Taipei] In response to media reports claiming that PetroChina "turned to the United States to purchase gas, resulting in losses of more than one trillion yuan over a long period of time," PetroChina solemnly clarified today (23rd) that this is not true and called on the outside world not to spread rumors. PetroChina's gas purchase contract lasts for 20 to 25 years, and payment will be made after actual delivery in batches and years. The total amount is by no means a one-time expenditure.
CNPC said that in recent years, the international geopolitical situation has changed suddenly, and oil and gas prices have fluctuated at high levels. CNPC shoulders the responsibility of stably supplying domestic oil and gas and absorbs costs as soon as possible to maintain stable domestic oil and gas prices and avoid soaring prices, resulting in six consecutive years of losses so far.
Regarding the procurement of LNG, China National Petroleum Corporation explained that it adopts a "risk diversification, diversified procurement" strategy, focusing on medium and long-term contracts, supplemented by spot goods, with gas sources coming from 14 countries. Since March this year, in response to the war in the Middle East and transportation disruptions in the Strait of Hormuz, China National Petroleum Corporation has urgently purchased alternative gas sources in non-Middle East regions to fully supply domestic gas needs.
According to CNPC statistics, the cumulative domestic gas import sources in the first eight months of this year accounted for Australia (35%), non-Middle East gas sources including Canada, Southeast Asia, Africa and other regions (31%), the United States (23%) and Qatar (11%; arriving in Taiwan from January to March 16).
CNPC continued to say that the long-term international gas purchase contract (20 to 25 years) signed by CNPC is based on domestic long-term gas demand, comprehensive consideration of commercial conditions such as supply security, diversified gas sources, and price competitiveness, and then payment will be made after actual delivery in batches and years based on domestic demand. The total contract amount is by no means a one-time expenditure. CNPC solemnly clarifies that the statement in today’s (23rd) daily report of “turning to the United States to purchase gas, resulting in a loss of more than trillion yuan in long-term contracts” is not true, and urges the outside world not to spread rumors.
In terms of domestic natural gas prices, China National Petroleum Corporation explained that China National Petroleum Corporation reviews the prices of various natural gas users on a monthly rolling basis in accordance with the natural gas price adjustment mechanism approved by the government. The report that "Taiwan Petroleum Corporation sold to Taipower at extremely low prices" is absolutely not true. This year, the selling prices for electrical industry users have taken into account changes in the cost of imported gas sources and have been adjusted multiple times. The relevant costs have been reflected in electrical industry users.
Open Questions
- What is CNPC’s specific loss estimate for the coming years?
- What are the details of the price adjustment mechanism for long-term gas purchases?
