The Development of Chinese Gas Pricing（中国天然气价格发展）.pdf

The Development of Chinese Gas Pricing: Drivers, Challenges and Implications for Demand OIES PAPER: NG 89 Contents Preface 2 Introduction4 1. Chinese gas prices in the international context 6 1.1 Chinese gas imports prices in comparison with international prices 6 1.2 Major imports and pricing development 6 2. The structure and evolution of natural gas price regulation 9 2.1 Chinese pricing structure and key determinants 9 2.2 The evolution of Chinese domestic pricing reform 12 2.3 Regional variations in market fundamentals and pricing reform16 2.4 Chinese gas price along value chains – A case study of Shanghai 21 3. The drivers for change and the gas-pricing challenges 23 3.1 Key drivers 23 3.2 Major pricing-reform challenges33 4. Implications of pricing developments for gas demand 36 5. Summary and Conclusions 42 Glossary 45 Bibliography 46 Figures and tables Figure 1: Chinese import prices vs international prices, H2/2006 – 2013 6 Figure 2: Chinese pipeline imports and LNG prices, 2013 7 Figure 3: Chinese gas pricing structure 12 Figure 4: Evolution of Chinese gas pricing regulation 13 Figure 5: Sectoral gas demand across the regions, 2011 17 Figure 6: Provincial city-gate prices across the three main regions, July 2013 18 Figure 7: End-user prices for the three main regions, 2013 19 Figure 8: Gas prices and tariffs along value chains to Shanghai, 2013 22 Figure 9: Growth of gas share of total provincial energy consumption, 2006-2011 23 Figure 10: Residential fuel prices across four major provinces/municipalities, 2013 24 Figure 11: Fuel prices for industrial users across four major provinces/municipalities, 2013 25 Figure 12: Ratio of NGV gas price to gasoline price across major provinces/municipalities, 201326 Figure 13: Coal- and gas-fired power plants: tariffs, generation costs and utilization hours, 2013 27 Figure 14: Output and wellhead prices