By staff reporter Yang Yue

(Caijing.com.cn) China is likely to adopt a new regime in 2010 for natural gas pricing that will use weighted prices for imported and domestic gas, an official with China National Petroleum Corp., the parent of PetroChina, told Caijing on Friday.

The official said the new system was determined in outline after the government solicited comment from the three major oil firms on a gas pricing reform plan.

The official added that under the new system, prices at urban gas distribution centers would rise, and ex-factory prices would rise correspondingly.

"But it will not be a sharp price rise, since the import volume of natural gas from Central Asia will still be small," this CNPC official said, adding that industrial users and household consumers will be charged different rates.

The new regime will be put in place as China imports more natural gas through pipelines, to diversify its energy sources in favor of more clean fuels.

China is building three major pipelines for natural gas imports from Central Asia, Russia and Myanmar. The Central Asia-China pipeline will start operations at the end of 2009, with estimated 2010 capacity of four to five billion cubic meters of natural gas.

More expensive imports will further raise China's natural gas prices in the future, the official said.

Under the current pricing scheme, prices at urban gas distribution centers consist of a capped ex-factory price and a fixed pipeline transmission cost. Consumers also need pay additional fees to the urban distribution centers. This distribution fee is also decided by the government.

The current scheme was established by National Development and Reform Commission, China's top economic planner, in 2005, when domestic gas still accounted for a major part of the Chinese market, Deng Yusong, an energy expert with the State Council's Development Research Center, told Caijing in August.

The high cost of gas imports was not considered in preparing the current scheme, Deng said.

Full article in Chinese: http://www.caijing.com.cn/2009-10-24/110292464.html