Operation mechanism of natural gas market in UK and its enlightenments to China's market-oriented reform

Operation mechanism of natural gas market in UK and its enlightenments to China's market-oriented reform

Natural gas

Natural gas transportation

Natural gas pipelines

Commerce

Costs

Competition

Gases

Laws and legislation

Privatization

Virtual corporation

National Balancing Point (NBP) of UK created the market operation and pricing mechanism based on a virtual trading point, and provided a regional market model for creating a single liberalized EU gas market. Therefore, studying on the operation mechanism of UK's natural gas market provides insights and references for China's market-oriented reform and trading hub construction. In view of this, we first analyzed the operation mechanisms of national balancing point, natural gas market and capacity market, then focused on the regulation and pricing models of capacity market, and finally proposed implications of UK's experience for China's natural gas market-oriented reform as follows. (1) Reform measures such as precedence of legislation, independence of pipeline networks, separation of vertically integrated incumbents, enforcement on giving up market share, and cultivation of new market players are worth learning from

(2) It is suggested that China's natural gas market-oriented reform should combine with the mixed ownership reform of state-owned enterprises in the industry

(3) Studying theoretical and model application of regulatory economics in UK will help enhance government regulation on transportation networks in China

(4) Many provincial natural gas pipeline networks in China are suitable for being developed into regional market pricing centers based on virtual trading points. In conclusion: (1) Virtual trading point realizes the standardization of natural gas in a larger geographical area, which is conducive to enhancing operational efficiency, transparency, liquidity and fairness of the market

(2) The operation and trading of virtual trading point is relatively simple, but capacity market of pipeline networks is based on complicated pricing theory and more difficult to supervise

(3) The price of virtual trading point can only reflect the supply and demand situation within a regional market. 2018, Natural Gas Industry Journal Agency. All right reserved.

135-142

10

38

Natural Gas Industry

2018

Zhou, Xuan

Dong, Xiucheng

Zhou, Miao

Ma, Linhe

journalArticle

10000976

10.3787/j.issn.1000-0976.2018.10.019