Research Of Market-Oriented Natural Gas Pricing Mechanism In China

Developing low-carbon economy and transforming economic developmentpattern are necessary for realizing scientific and sustainable development of ournation’s economy. As a high calorific value, low emission and low contaminationenergy, demand for natural gas has been surged and caused a huge pressure for itssupply, local demand-supply disequilibrium and many other problems.As pointed outby International Energy Agency, the scale and status of national natural gas industrymainly depend on its pricing policy which implies that the cornerstone of healthy andorderly progress of natural gas are further perfect the pricing policy of natural gasmarket.Revolution of natural gas pricing is a complicated systematic project whichneeds comprehensive arrangements in many aspects such as industrial structuraladjustment. With a mature timing to reform the pricing mechanism and a clear path togo, our natural gas industry is ready to transform from monopoly pricing to marketpricing. But the definite steps of reform and how to realize market pricing are still notclear. For the aspect of academic support, extant researches about reforming of naturalgas pricing mechanism were mainly about qualitative analysis, lack of quantitativeresearch and models, neither nor researches about nurturing processes and policies ofthe transformation to market pricing. What’s worse, researches about effects andimpacts of post price-change market are rare. Based on the research gap mentionedbefore and to explore the feasible strategies of future market of natural gas industries,this paper starts from the current situation of pricing mechanism of our nation’snatural gas industry, using experience of matured international natural gas market,based on theories and methodologies of game theory, following systematic science, toconstruct the theoretical models of natural gas pricing mechanism. In advance, themodels cover the path and orientation of reforming through all streams of natural gasindustry and explore inner mechanism of natural gas pricing with specific methods and giving out steps of market transforming. Meanwhile, case study in this paperanalyzes the transmission between price of natural gas and our national economy toprepare theoretical base for effects resulted from reform. What’s more, this analysiswill offer theoretical support for the stable transform of resolution and policy packageof reform.Primary conclusions of this paper include:1. orientation of reform of natural gas pricing is market pricing, and the mainpath should be: first, access upstream manufacturing field should be granted moreeasily and competition mechanism should be introduced. Second, governmentrestriction for midstream should be enforced and access to pipeline transportationshould be introduced. Finally, for the downstream market, multiple-party competitionmarket should be encouraged to realize the orderly development of market of naturalgas.2. Access to pipeline transportation will introduce competition effectively andenhance the negotiating power of downstream market to ensure users’ interest andefficient of entire natural gas market.3. Case study of fluctuate of price of natural gas shows that the change of thisprice will effect multiple aspects of national economy and people’s life which asks forthorough consideration, careful decision, progressive and gradual process andsystematic actions when the policy and actions are made for the reform of natural gasindustry.The innovations of this paper include:1.Price mechanism of natural gas for future market is developed using theoriesand methods of game theory. The models include comparison and analysis ofdifferent reform methods in all streams of natural gas industry.2.Besides short term reform methods, this paper offers the specific methods formarket cultivation and transformation based on current pricing mechanism to perfectindustry structure and to realize market pricing. 3.this paper analyzes the transmission mechanism of natural gas price throughthe VAR model and Granger cause-effect test to test the transmission mechanism andthe extent of effect for various economic variables.