Gas Market Liberalisation Reform

Key insights from international experiences and the implications for China

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Abstract

This report systematically examines the key points for natural gas liberalisation and regulatory reform in Europe and the United States over the past decades. It addresses market design, third-party access, capacity allocation, trading centre formation, pipeline tariff setting, and regulatory measures. In addition, the report analyses the transition process itself and identifies the related measures that can help national markets become more openly competitive. Based on these international experiences, the report then looks at the current situation of natural gas liberalisation in the People’s Republic of China, focusing on the importance of designing a suitable framework for the natural gas market by using best-policy tools.

The central goal of this report is to allow policy makers in China to benefit from international experiences to effectively promote the current liberalisation, the success of which will also greatly influence the global industrial development of gas.

This report is the result of a project involving relevant Chinese, European, and United States institutions under the overall oversight of the International Energy Agency.

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Acknowledgements

This report was prepared jointly by the International Energy Agency (IEA) and the National Energy Administration (NEA) of China, under to the IEA-NEA three-year work programme. It was coordinated by YANG Lei, IEA Senior Advisor. The lead authors at the IEA were: JeanBaptise DUBREUIL, LEI Xiang, LI Xiang, YANG Lei and YAN Yilun. Important contributions were also made by Cristina MORILLAS and Aya YOSHIDA.

China5e and ExxonMobil assisted throughout the work, contributing valuable inputs and assistance in drafting sections on international experience and China. The main external authors were: KOSHY MASON Akshaya, RAN Ze, SUN Xiaomei, Shelley RUSZKOWSKI, with other contributions from CHENG Yanhong and Kees BOUWENS.

Colleagues from the IEA and officials from the China National Financial Office, the National Development and Reform Commission, as well as the NEA provided valuable support to this report. They included: AN Fengquan, David BÉNAZÉRAF, Amos BROMHEAD, Cyril Cassisa, Laura COZZI, DONG Xiang, DING Zhimin, Peter FRASER, Tim GOULD, GU Jun, GUO lei, Lisa Marie GRENIER, Zoe HUNGERFORD, Tae-Yoon KIM, LI jin, LI Fanrong, LI Yinghua, LIU Deshun, LIU Hong, LV Chuanjun, LU Pengyi, MA Ning, Kristine PETROSYAN, QI Shuli, Keisuke SADAMORI , Alan SERAL, Paul SIMONS, SONG Wen, Dave TURK, Laszlo VARRO, WANG Jing, WANG Siqiang, WANG Xiaowei, WEI xiaowei, ZENIEWSKI Peter, ZHANG Junhao, ZHANG Yuqing, ZHU Hongguang, ZHU Xiaohai, and ZUO Gang.

Other valuable contributions were provided by experts as part of the review process, and also through a series of four international workshops organized by the IEA and a two-week visit to the United States. They included: BAI Jun (Beijing Gas), Federica BERRA (ExxonMobil), CHEN Gang (Huaneng), CHEN Shouhai (Petroleum University), DENG Yusong (Development Research Center of the State Council), GUO Jiaofeng (DRC), DU Daming (Huaneng), DU Tina C (ExxonMobil), FENG Liwen (China5e), FU Shaohua (SHPGX), HAN Xiaoping (China5e), HE Zhao (EPPEI), JING Chunmei (China International Economic Exchange Center), LU Yichuan (Energy Foundation), Wayne A. LEPIRE (ExxonMobil), LI Yalan (Beijing Gas), LI Yao (SIA Energy), LIU Tairu (Ministry of Natural Resources), MA Li (ECP), PAN Jiping (Ministry of Natural Resources), Todd M SPITLER (Exxonmobil), WANG Zhongan (CNOOC), CHEN Xinhua (Beijing International Energy Club), Jessica HENRY (British Embassy), Edward KELLY (IHS Markit), Nina PALMER (United States Embassy), JIA Maggie (Chennier), Maggie JIA (Chennier) , LEUNG Mabel (Exxon Mobil), PENG Ying (United States Embassy), John WILLIAMS (POYRY), Christian ROMIG (POYRY), SUN Juan (Minsitry of Natural Resources), Brad WILLIAMS (Spitfire), XU Yuchang (Xinhua News Agency), WANG Yongxiang (Huaneng), XIAO Yang (ExxonMobil), YANG Ling (SHPGX), YANG Yumin (ConocoPhillips), YE Guobiao (SHPGX), YUAN Jing (Energy Foundation), ZHANG Xiaoru (University of Houston), ZHU Baowei (Ministry of Finance), ZHU Xingshan (CNPC), ZHONG lijin (Energy Foundation), ZHOU Xizhou (IHS China), ZOU JI (Energy foundation), Luis Bertrand RAFECAS (IGU), Ana Sophie CORBEAU (BP), CHEN Xiaobao (Oxford University), Ross E. HODGES (ConocoPhillips), Volker KRAAYVANGER (Uniper), Michal MEIDAN (Energy Aspects), Osmancik NAZIM (Centrica), Carolin OEBEL (Uniper), Cody MOORE (Mercuria), REN Xianfang (Shell China), David SANDALOW (Columbia University), SUN

Xiansheng (IEF), Laurent VIVIER (Total), Richard XU (Iron Rock), and ZHAI Yongping (Asia Development Bank).

The Energy Foundation, ExxonMobil, and Huaneng provided generous support for this research. Thanks to the US Department of Energy, the US Embassy in China, the British Embassy in China, the US-China Energy Cooperation Program (ECP), the ENN Group, Mercuria, IDG energy, ConocoPhillips, Chenier, Iron Rock, IHS Markit, Baker Hughes, POYRY, Oxford Institute for Energy Studies, Shanghai Petroleum and Gas Exchange Center for their assistance.

The Office of Communications and Digital of the IEA has provided strong support for the publication and distribution of this report, with special thanks to Astrid DUMOND, Katie LAZARO, Jad MOUAWAD and Therese WALSH. Thanks to Adam MAJOE for editing the report in English.

For questions and comments on this report, please contact: YANG Lei (Lei.Yang@iea.org).