Evolution and trend of natural gas pricing mechanism in China

Since the West-to-East Gas Pipeline I was formally put into commercial operation by the end of 2014|, natural gas industry in China has come to the stage of rapid development. This is the critical period for a tremendous change in the structure of natural gas industry chain, for, along with it the natural gas pricing mechanism continues to evolve. In view of this, this paper reviewed the evolution process of natural gas pricing mechanism in China and predicted its future development trend. The following conclusions were drawn. (1)Before the rapid development stage, China did explore the ways of natural gas pricing reform. (2) Since entering the rapid development stage, China has initially established the Benchmark Gas Price after a decade of effort. (3) The evolution of natural gas pricing mechanism in this decade has been following the rhythm of the government's reform on Simulative Market. (4) All kinds of clues and experiences demonstrate that China will shift to the structural reform of natural gas industry chain, thereby to accelerate the market-oriented process of natural gas pricing and to fight for more regional pricing power in the Asia-Pacific gas market. (5) The core of the structural reform lies in the independence of natural gas free trade from monopoly, which of course needs a transition period, and the gas import right may be further quickly deregulated. ©, 2015, Natural Gas Industry Journal Agency. All right reserved.