China to grant tax rebates for natural gas imports

Updated: 2011-08-22 14:14


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BEIJING - China will grant tax rebates for its imports of natural gas, including piped gas from central Asia and seaborne shipments of liquefied natural gas (LNG), Reuters reported.

The rebates will apply when import costs are above domestic wholesale prices and will cover the period from 2011 through 2020, as well as central Asian imports before the end of 2010, the Ministry of Finance said in a statement posted on the its website,

The policy will help trim heavy losses incurred by firms such as PetroChina, which has since late 2009 been forced to sell pricey Turkmenistan gas at below-market prices.

China is rapidly raising imports of natural gas, a fuel that is cleaner than oil and coal, with purchases in the first seven months this year doubling year-ago levels, part of a broader plan to boost natural gas use and curb coal consumption.

China's gas demand is projected to triple in the coming decade to about 300 billion cubic meters and imports are likely to make up nearly a third of that demand, analysts have said.

The rebates apply to state-mandated import projects including the central-Asia pipeline venture operated by PetroChina, and LNG import terminals currently in use and those to be later approved by the state, the ministry said.

Imports currently account for roughly 20 percent of consumption.

The company will receive rebates on a quarterly basis and the grants will be based on the proportion derived from the price gap between imports and domestic prices divided by import prices.

Chinese media has reported earlier this year that PetroChina recorded a loss of 3.7 billion yuan on 4.3 billion cubic meters of imported gas last year, which indicated the firm was making a loss of nearly $130 for each thousand cubic metres of gas.