Study On Vertical Integration Strategy Of Natural Gas Company A

As a basic industry,the natural gas industry has a certain degree of monopoly.The implementation of the national examination and approval registration system for resource exploration and exploitation,which resulting in three national oil companies controlling more than 95% of the upstream market.The approval of long distance pipeline must be implemented with gas source and market,which sets a high threshold for enterprises to enter the midstream of long distance pipeline.The downstream city gas implements with the franchise management.On May 21,2017,the CPC Central Committee and the State Council issued the "Several Opinions on Deepening the Reform of the Petroleum and Gas System",which points out it is necessary to adhere to the direction of problem orientation and market direction,the deepen reform of the oil and gas exploration and exploitation import and export management,pipeline network operation,production and processing,product pricing system reform and national owned oil and gas companies release the market vitality and embodied the attributes of energy commodities.Natural Gas Company A is a newly established enterprise in the natural gas industry of Sichuan province.It is held by the state owned assets and has been established for about 7 years.It is mainly engaged in the construction and operation of long distance pipeline,and has a small amount of industrial user terminal market sales.The "13th Five-Year Plan" period is the decisive stage for China to complete the building of a well-off society in a prosperous way.It is a crucial time for Sichuan Province to adapt to the new normal of economy and accelerate its transformation and development.It is also a time when A natural gas company lays the foundation.However,with certain degree of development and accumulation,the problems of less business types,single development mode and low income level gradually come to the light,and the company's development has hit a bottleneck.With the steady development of the national economy,the prevention and control of environmental pollution has been intensified,the revolution in energy production and consumption has been promoted,and the natural gas industry has ushered in new opportunities for development.The next decade will be a critical time for Natural Gas Company A to define its mission and vision clearly,formulate strategies and achieve leapfrog development.This study is guided by enterprise strategic management theory,with A natural gas company as the research object,and using strategic analysis tools for in-depth analysis.On the basis of full investigation and research on Natural Gas Company A,the macro environment and industrial environment.Firstly analyzed by PEST tool and Porter's five-force model analysis method to find out the opportunities and threats faced by the company's development.The external factor evaluation matrix is used for quantitative evaluation,and the conclusion is that the opportunities outweigh the threats.Therefore,it analyzes the internal resources of the company,recognizes the internal advantages and disadvantages of the enterprise,thus uses the internal factor evaluation matrix for quantitative evaluation,and draws the conclusion that the advantages outweigh the disadvantages.On this basis.After that,using the SWOT analysis method to summarize the Natural Gas Company A's overall development strategy,vertical integration strategy,including equity participation or cooperation for natural gas development and production of LNG backward integration strategy,security sources,developing gas peak shaving forward,merger or acquisition of gas company,to build LNG logistics network of the forward integration strategy,promote sales.In the end,it puts forward the implementation plan that fits the development strategy of Natural Gas Company A.The research significance of this paper lies in that: the approval of natural gas pipelines in the same region is unique,and A Natural Gas Company has formed some right of discourse in the midstream of the industry through the construction of gas transmission pipelines.However,the business profitability is not high due to the pricing mechanism of pipeline and transmission fee,and the business operation is obviously restricted by the upstream gas source and downstream demand.Consequently,the vertical integration strategy can ensure the sustainable development of the enterprise.It is hoped that the conclusions and results of this study can provide reference for similar industries and enterprises.