A PetroChina station in Xinjiang, China. Photo: Wikipedia

The Shanghai Oil and Gas Trading Centre held bidding for pipeline natural gas for the first time on Tuesday, with a total of nine million cubic meters of gas sold at the highest price, the 21st Century Business Herald reported.

All the bidding products came from PetroChina’s natural gas subsidiaries in Shanghai city as well as Shandong, Henan, Anhui, Jiangsu and Zhejiang province, the report said.

The natural gas price in Shanghai was taken as the benchmark price, which is 2.08 yuan (31.9 US cents) per cubic meter. Limited by the centre’s trading rules, the ceiling transaction price was 20% higher than the base price, so all products were sold at 2.496 yuan per cubic meter, adding to a total of 22.46 million yuan.

The heated bidding reflects the massive demand for natural gas in east China. Liu Guangbin, an analyst from Zhuochuang Information, said a lot of industrial users have switched to natural gas from coal, in order to meet the new environmental protection standards launched this year in east and north China.

Agricultural users are also in the middle of the coal-to-gas transformation, and the demand for gas will likely continue to grow, the report said.