May 16, 2018 / 9:09 AM / a year ago

UPDATE 1-Chongqing Oil and Gas Exchange sold pipeline gas in debut trading

* China launches second gas exchange to help buyers access supply

* More gas producers set prices through exchange auction

* Chongqing Exchange to announce LNG auction result on Wednesday (Adds background, details)

BEIJING, May 16 (Reuters) - About 28 million cubic metres of pipeline gas for delivery at the end of May was sold to 56 city gas distributors of city gas during the start of trading on Friday on the Chongqing Oil and Gas Exchange, according to an exchange statement and an official from the exchange.

The volume was offered by the southwest sales unit of PetroChina at a premium of 0.155 yuan ($0.0243) per cubic metre over city gate benchmark prices, an exchange official told Reuters on Wednesday.

The buyers were from the provinces of Yunnan, Guizhou, Sichuan and the city of Chongqing, the official said, who declined to be identified because he is not authorized to speak to the media.

The Chongqing exchange sold another 5 million cubic metres of pipeline gas from PetroChina at the same price on Tuesday and is due to announce result of its first LNG auction on Wednesday afternoon, said the official.

The launch of trading on the Chongqing exchange, China’s second physical gas exchange platform after the Shanghai Petroleum and Gas Exchange, is another step in the country’s push to liberalise its natural gas markets and shore up supplies.

China’s northern provinces experienced a serious supply crunch over the past winter, forcing producers to halt gas supplies to industrial users such as fertilizer plants and redirect gas to residential users.

In April, China’s top planning agency ordered state-run natural gas producers to sign annual supply contracts with majors users by the end of last month. Major state producers are increasingly using the two exchanges to set prices for their supply contracts.

In April, China National Offshore Oil Corp sold liquefied natural gas cargoes on the Shanghai exchange for delivery during the winter.

$1=6.3667 Chinese yuan renminbi Reporting by Meng Meng and Aizhu Chen; Editing by Clarence Fernandez and Christian Schmollinger

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