How can the coal to natural gas industry get out of the cold winter
"as a strategic industry to ensure national energy security, has coal to gas played its role as expected? In recent two years, we often see the news of new projects launched, but how many have really been done? If the projects that have been put into operation have lost their economy, will there be new enterprises in the future?" A few days ago, at the annual meeting of the coal chemical industry special committee of the China Federation of petroleum and chemical industries, Wu xiuzhang, deputy general manager of China Datang Group Corporation and general manager of China New Energy Chemical Corporation, used a series of questions to reveal the current situation of the development of the coal to gas industry, which is not optimistic
at present, China's dependence on natural gas is close to 40%. As a "national strategic energy technology reserve and capacity reserve", coal to natural gas is of great significance in ensuring national energy security. In August 2009, the national development and Reform Commission approved the Datang International keshketeng coal to natural gas project (hereinafter referred to as "Datang project") and listed it as the first national coal to gas demonstration project. Although it has been developing for nearly 10 years, China's coal to gas industry is still in the "tepid" demonstration stage, which is far from the high expectations of the industry and even the country. At present, including Datang project, four coal to gas projects have been put into operation in China, three of which have long been mired in difficulties such as high upstream coal costs, monopoly of midstream transportation pipelines, and low downstream gas prices, resulting in long-term losses and inability to achieve benign development. These "negative demonstrations" of the pioneers directly led to the hesitation of the entire industry in a strong wait-and-see mood
what is constraining the "strategic" industry of coal to gas? How to break the game? With these questions, this newspaper recently went deep into the project site to explore the answers
gas prices have fallen again and again, and the demonstration projects have fallen into losses.
in the plant area of Xinjiang Qinghua coal to gas project in Yining, the signs of "national demonstration project of coal to natural gas" and "national demonstration project of coal deep processing in the 12th Five Year Plan" can be seen everywhere
"in 2012, we were approved by the national development and Reform Commission as a national demonstration project of coal to natural gas and a demonstration project of coal deep processing, which were constructed in two phases. The first phase of the project uses the technology of pressurized gasification of crushed coal in a fixed bed, which is one of the ways in the coal chemical route with the shortest process, the highest conversion efficiency and relatively low energy consumption. The successful operation of the first phase proves that this technology is truly localized." Lixuguang, deputy general manager of Xinjiang Qinghua energy group, told, "the total scale of our plan is 5.5 billion cubic meters/year. At present, only phase I is put into operation, and the phase II project has long been ready for construction, but due to the experience of phase I project, it is delayed."
Li Xuguang's "encounter" stems from an agreement. In February, 2013, Xinjiang Qinghua signed the purchase and sale agreement of coal to natural gas with PetroChina. According to the agreement, Xinjiang Qinghua sells coal to natural gas to PetroChina at the price of 1.60 yuan/cubic meter, and the contract is valid until December 31, 2042. At the same time, both parties agreed that during the term of the agreement, the contract price could be reviewed regularly and adjusted after both parties reached an agreement and signed a supplementary agreement on part of the electricity bill whose income is to save users
on December 28, 2013, Xinjiang Qinghua coal to gas project phase I produced qualified natural gas and officially entered the west east gas pipeline of PetroChina. At that time, after the national development and Reform Commission adjusted the price of natural gas for non residential use that year, the national average gate price (the sales price of natural gas suppliers such as PetroChina when selling gas to downstream) has been increased from 1.69 yuan/cubic meter at the beginning of the year to 1.95 yuan/cubic meter
however, two years later, the national development and Reform Commission issued another notice to reduce the price of natural valve stations for non residents from November 20, 2015, with a national average decline of 0.7 yuan/cubic meter. The price of natural gas valve stations for non residents in Xinjiang has fallen to 1.15 yuan/cubic meter, becoming the lowest price among all provinces and regions in China. In other words, at this time, in Xinjiang, the price of pipeline natural gas sold by PetroChina through the gate station has fallen to 1.15 yuan/cubic meter, which is far lower than the contract price of 1.60 yuan/cubic meter previously agreed with Xinjiang Qinghua, resulting in "upside down"
after experiencing sharp market fluctuations, price negotiation began to become a key word in the business exchanges between Xinjiang Qinghua and PetroChina. According to Li Xuguang, in the absence of an agreement between the two sides, PetroChina suspended settlement with Xinjiang Qinghua from January 1, 2016. As the settlement of PetroChina is the only source of funds for Xinjiang Qinghua, the latter immediately fell into a serious financial crisis, and the capital chain once collapsed. "In order to ensure the temporary survival of the national demonstration project, with the help of the Xinjiang Autonomous Region government, the two sides agreed to settle at a temporary price of 1.15 yuan/cubic meter for the time being." Since then, as the state reduced the value-added tax rate twice, the temporary settlement price fell to 1.13 yuan/cubic meter and 1.119 yuan/cubic meter respectively, significantly lower than the contract price, and Xinjiang Qinghua immediately entered a long loss period
the industry has a large range of losses. Both the production and purchase sides have their own arguments.
there is also Datang's 1.33 billion cubic meters/year phase I coal to gas project. In fact, except Inner Mongolia Huineng 1.6 billion cubic meters/year coal to gas project, whose products are directly sold in the form of liquefied natural gas (LNG) and do not need to be transported through pipelines to achieve profits, the three coal to gas projects that have been put into operation in China are all at a loss due to price problems
according to Xia junbing, deputy general manager of Zhongxin energy and chemical company and general manager of Datang Keqi coal to gas company, Datang project phase I was incorporated into Beijing gas pipeline on December 24, 2013, and officially supplied gas to Beijing. After four price reductions, the tax included settlement price of Datang project has been reduced from 2.72 yuan/cubic meter in the early stage of operation to 1.77 yuan/cubic meter, a decrease of nearly 1 yuan/cubic meter. "We agree that the gas price changes with the actual market conditions. Previously, PetroChina took advantage of the opportunity of the national development and Reform Commission to adjust the natural valve station price to reduce our price, but later, the civil gas price in Beijing rose by more than 0.2 yuan per cubic meter, but the price PetroChina gave us has not changed. To be honest, according to the current 4. Important price range, most coal to gas enterprises simply cannot survive."
however, PetroChina also seems to have difficulties. According to PetroChina's reply on the settlement price and gas supply volume of Xinjiang Qinghua coal to gas project in August and October this year, the reason for the reduction of gas price is that "coal to gas and conventional natural gas are mixed and transported together after entering the pipeline, and cannot be distinguished during sales. The reduction of gate station price has led to serious price inversion of PetroChina, and the relevant sales business is also in a state of loss"
in addition, the reply also pointed out that Xinjiang Qinghua's gas supply failed to meet the requirements of the contract, and PetroChina needed to purchase a large amount of LNG spot to make up, resulting in serious losses
but Li Xuguang put forward different views on this: "first, the purchase and sale agreement of coal to natural gas signed by Xinjiang Qinghua and PetroChina Natural Gas Co., Ltd." There is no agreement on the price adjustment mechanism between China and the United States. The losses of PetroChina caused by the state's reduction of gate prices cannot be borne by Xinjiang Qinghua; Second, because PetroChina unilaterally lowered the purchase price, resulting in a serious shortage of cash flow and huge losses, the enterprise has been unable to build the second phase project to ensure gas supply; Third, since April 2015, PetroChina has required enterprises to actively limit production through, written letters and other means. " In addition, Li Xuguang also stressed that during this period, PetroChina did not raise any written objection to the issue of gas supply, and received gas supply according to the actual gas supply every month and made settlement according to the facts
in this regard, we further called PetroChina to learn about the relevant details and the latest price negotiations, but Zhongling was once just a traditional means of transportation. PetroChina said that its internal structure was being adjusted, and the original personnel in charge had been transferred, so it was temporarily unable to reply in time. As of press time, no relevant reply has been received
the cost remains high, and the pricing lacks fixed reference
"at present, if the coal price is calculated at 160 yuan/ton, the production cost of our project alone will be 1.1-1.2 yuan/cubic meter." According to Li Xuguang, as Xinjiang Qinghua holds its own coal mine assets, the coal price cost has a certain price advantage compared with other similar projects. But even so, the cost of raw materials also accounts for about 1/3 of the production cost. "The financial cost accounts for about 30%, and the others are equipment depreciation and labor costs."
according to Wu xiuzhang, the raw material cost of Datang project accounts for as much as 60%. At present, the purchase price of coal to natural gas produced by PetroChina for Datang project is about 0.6 yuan/cubic meter higher than that of Xinjiang Qinghua project, and the high raw material cost of Datang is also one of the important reasons. "In recent years, the sharp wave of energy prices, the tip of the diamond needle contacting the test piece, the coal price rose from 300 yuan/ton to 600 yuan/ton, and the international crude oil price rose from 45 dollars/barrel to 85 dollars/barrel, but the natural gas price has not changed in the three years from 2016 to 2018."
Wu xiuzhang said that due to the high cost, the current price of coal to natural gas is lower than that of imported gas, and the imported pipeline gas enjoys national preferential policies, the price of coal to natural gas has always been lack of market competitiveness
at its root, Li Xuguang believes that this is because the price of coal to gas currently lacks a reasonable pricing reference. "It is best to give a certain price reference on the premise of proper consideration of cost, such as international oil price and imported pipeline gas price, which can be used as reference standards. Since coal to gas is positioned in terms of national strategy and energy security, I think the imported pipeline gas price is a good reference."
in this regard, wangxiujiang, Deputy Secretary General of the coal chemical industry special committee of the China Federation of petroleum and chemical industries, also said that at present, China still lacks a unified coal to gas pricing mechanism, and the corresponding coal to gas purchase price floating mechanism can be determined with reference to the imported gas price. "At the same time, it is also necessary to introduce a bottoming out mechanism to solve the current situation that the input price of coal to gas is seriously lower than the production cost of enterprises. In addition, the reform of natural gas pipeline can be further strengthened, and the pipeline transportation and sales can be separated for direct gas supply. Coal to gas enterprises only need to pay some pipeline transportation fees, which can be directly transported to users according to the market price."
in addition, it is difficult to guarantee the supply of coal, which also restricts the development of the coal to gas industry. Wu xiuzhang told: "affected by the local 'power coal protection' policy in winter and the pressure of coal enterprises' own environmental protection production, there was a serious shortage of raw coal supply from January to February and from June to July this year, resulting in the forced production of Datang project. If our second production line is launched, there will be greater uncertainty in coal supply."
Wang Yu, director of the energy and chemical division of the petroleum and Chemical Industry Planning Institute, further pointed out: "The core reason for the limited profitability of coal to gas projects is that the price of natural gas entering the pipeline is too low. Whether it is Xinjiang Qinghua, Datang Keqi and other projects, if they can sell at the price agreed in the initial contract, enterprises can make money. However, because the natural gas pipeline is controlled by PetroChina, coal to gas enterprises lack the right to price for a long time, and there is a large gap between the actual gas price and the price agreed in the contract."
production capacity release is blocked, and enterprises seek product transformation
it is also understood that compared with other coal deep processing and coal chemical projects, the coal to gas industry still has a single product structure