Monopoly SOEs' duty

The juxtaposition of severe natural gas shortages in an increasing number of southwestern and central cities and louder pleas by providers for raising gas prices has led many to believe that the country's two monopoly gas providers, China Petrochemical Corporation (Sinopec) and China National Petroleum Corporation, are exerting pressure for a price rise.

Both deny the suggestion and claim that part of the gas supply to the southern cities has to be diverted to northern cities that have been hit by unexpected snowstorms. Maybe they are right, but not exactly. Sinopec's pipeline to supply natural gas from Sichuan province to eastern provinces was originally expected to be completed by the end of this year, but price agreements are still to be signed with local gas retailers.

Insiders from both the gas and oil giants reveal that gas companies are not keen on expanding production or developing new gas fields unless prices are raised to what they say are reasonable levels. Maybe the early snowstorms in the north have provided both giants with an opportunity to exert pressure on the National Development and Reform Commission for a rise in natural gas prices.