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On May 26, 2022, the PRC National Development and Reform Committee (NDRC) issued the “Guidance Notices on Improving the Pricing Mechanism for Regasification Services at LNG Import Terminals” (Notices guidance). The key points of the guidance notices are:
- the price mechanism for the regasification service changes from a price set by the government to a price guided by the government;
- guidance notices are issued to 11 provinces/municipalities (including Guangdong, Tianjin, Shanghai, Jiangsu, Zhejiang, Fujian); each province/municipality is encouraged to put in place a maximum price/ceiling and to publicly disclose its own maximum price for regasification service by the end of 2022; the price of the regasification service should include offloading, temporary storage, regasification of LNG and other related costs;
- the price of the regasification service must not include the tariffs of the outgoing gas pipeline;
- a unified pricing mechanism will be used; the maximum price for the regasification service must be established according to the “allowed cost plus reasonable income” method; and
- the maximum price for the regasification service will be reviewed every three years.
The guidance notices will have impacts on current and future LNG projects in China, particularly terminal use agreements such as potential third-party use of unused terminal capacity.
See the latest announcement from the NDRC below:
(May 26, 2022) (in Chinese only)
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