Taoliang Lee

The Global Natural Gas Market

Global natural gas consumption, both in absolute terms and as a share of the energy usage mix, is continuing to grow. This growth has been driven primarily by changes in patterns of economic activity, energy intensity and energy substitution. Of these, the primary driver has been the switch to natural gas from other sources, primarily oil. Natural gas prices have consistently remained high in recent years, but despite this and the fact that gas has not been given any major preferential advantage compared to other energies, there has been no marked dampening of demand.

Potential for Natural Gas to Act as a Substitute Fuel in China

Unlike coal and oil, natural gas does not have an exclusive niche. Analysis of international experiences has found that growth in natural gas consumption in other countries has come about largely as a result of substituting gas for other fuels.

International Development Trends

Throughout the world, natural gas is gaining prominence in national energy systems. In many economies its share of the energy mix is growing. Major factors behind this global growth include market liberalisation, a switch from other fuel sources and improved access to unconventional natural gas reserves. Environmental and energy security considerations have added impetus to the trend.

Analysis of Medium- to Long-Term Natural Gas Demand and Supply

This section explores various aspects of the development of industry and the economy, and the changes in supply and demand of different energy sources, considered in combination with projected changes in economic growth, advances in technology and shifts in industrial structure. The aim is to determine the medium- to long-term demand and supply of natural gas and other energy sources in China.

International Natural Gas Supply and Quantities Available to China

This section analyses potential future changes in international natural gas market supply and demand and the available natural gas import volume for China, as well as what reasonable measures China should take, including suitable policy adjustments, to promote its own natural gas supply and demand security.

A Close Look at the Natural Gas Industry Chain

The previous section set out international experience in the development and evolution of natural gas markets. A key insight from the five country case studies is that liberalisation requires different regulatory approaches for different parts of the natural gas value chain.

Policy Measures and Safeguards to Support Natural Gas Market Liberalisation and Regulatory Reform

The fourth plenary session of the Communist Party Central Committee proposed the creation and completion of a legislative system, constituting a historical move towards the creation of the conditions necessary for legislative reform, laying the foundation for future legislative work. Thus legislative work should take a leading role in promoting economic and social development, which will involve a transition from “policy-guided action” to “legally guided action”, ensuring that reform and legislation keep step, and that reforms occur according to the law.

Regulatory System Reform to Support Natural Gas Market Liberalisation

Summarising international experience in relation to natural gas market reform, while giving special consideration to China’s specific situation, the creation of a natural gas market system and reform of administrative systems should embody the principles described below.

Analysis of China’s Natural Gas Infrastructure Development Strategy

Since the West-East Pipeline began operating in 2004, China’s natural gas infrastructure has developed rapidly.

Environmental and Social Value of Natural Gas

Natural gas, as a clean energy source, can reduce the economic losses caused by environmental pollution from coal and petroleum. Based on international experience of natural gas consumption development, it is clear that, while natural gas lacks an obvious price advantage and has even higher direct costs, it is still an effective substitute for other energy sources.