Optimal Strategy For Natural Gas Import And Reserve Based On Exporter's Preference

There is an obvious regional imbalance in the production and consumption of natural gas in the world,which leads to a large scale of trade between countries and regions.Currently,the global demand for natural gas is about 3.5 trillion cubic meters per year,and trade accounts for about 30% of total natural gas demand.There are two obvious characteristics in the natural gas trade market.First,geopolitics has become an important factor affecting the decision of natural gas.Gas exporting countries may have different preferences for different importers because of the differences in political,cultural and religious aspects of the importers and exporters.Second,from the global point of view,the natural gas trade exhibits a clear oligopolistic market because of the high cost of natural gas transportation and other reasons.This paper analyzed the import of natural gas and the reserve strategy under the influence of the preference of exporter using the theories of geopolitics,optimal control and differential games.The main research work and results are as follows:(1)The importer and exporter Stackelberg game was constructed,and the equilibrium of gas export price and the domestic gas sales price of importer were obtained based on the differential game theory.The study finds that,the domestic gas sales profit and consumer surplus of importer are enhanced,and the time to achieve the equilibrium price is extended if the exporter preferences increase.The price of natural gas will tend towards a lower equilibrium at a faster rate if the market demand for gas of importer has a great cross elasticity to the price of alternative energy.The price of gas will tend towards a lower equilibrium at a slower pace if the price of gas in importer is adjusted at a relatively fast rate compared to alternative energy prices.Two above scenarios would increase consumer surplus of importer,but would reduce imports of natural gas.The positive and stable preference relationship between the importer and the exporter will help to boost the profits of importer and stabilize the domestic market.(2)Simultaneous game model is constructed between natural gas importing countries,and the optimal import strategy of importer is obtained under equilibrium.The results show that when the exporter's preference on the importer is strong,the optimal import quantity of importing country increases with the increase in expected import quantity or the discount rate of imported natural gas.The limit value of imports is proportional to the lowest gas price and inversely proportional to the price growth.The optimal import quantity of importer will increase with the increase of the preference of exporter or the decrease in the expected import quantity of other importers.When the preference of exporter is very weak,the time required by the importer to reach the expected import demands is prolonged.(3)The diversified import strategies of importer under the preference of exporter were considered.The explicit equilibrium solution was obtained.The effect of exporter's preference and the diversification degree of importer on the consumer surplus and the optimal import quantity of importer was analyzed.The consumer surplus of importer increases with the diversification degree of other importers.When the Imports Diversification Degree(IDD)is improved,the diversification degree of other importers has less impact on the consumer surplus of the importer.There is an optimal IDD that can take into account both economic interests and energy supply security for the impoter.China's current compass import strategy is conducive to ensure the safety of energy supply to some extent,and improve the efficiency of regional energy supply,but it also needs to guard against potential losses resulting from excessive investment or diversification.(4)The optimal control model of natural gas reserve under the preference of exporter was constructed.The effect of the strategic reserve of gas import and domestic price levels of importer was considered.Thus,the dynamic change path of optimal strategic reserve,import volume and domestic price level of natural gas were obtained.The influence of exporter,monopoly power,importer's risk aversion of gas supply interruption and reserve cost coefficient on the optimal strategy was analyzed.In consideration of the total utility of consumer surplus and supply security,the optimal reserve quantity of natural gas is inversely related to import quantity and domestic price level.There is an optimal gas reserve range,where the reserve quantity can ensure imports utility maximization and prevent the domestic natural gas prices upside down.As the export country's monopoly power increases,or the import country's aversion to the risk of gas supply disruption increases,the optimal growth rate of natural gas reserves will slow down.When the monopoly power of exporter is strong,the optimal import quantity and domestic price level will be not significantly affected by the increase of risk aversion of gas supply.At the same time,excessive reserves will reduce the security effectiveness of the reserve supply.China's natural gas consumption in 2016 is about 200 billion cubic meters,with an import of about 60 billion cubic meters.With the increase of economic growth,the development of urbanization and the pressures from carbon emissions and other environmental issues,natural gas is expected to become an important clean energy that will be fastest growing in China's future decades,and the import dependence is likely to rise.We believe that the analysis of the different information structures of natural gas market dynamic games,not only helps to find and correctly understand the possible market equilibria in theory,but also contributes to the formation of rational natural gas import and reserve strategy in practice.