Progress and Suggestions on Institutional Mechanism Reform of Natural Gas Pipeline Infrastructure in China

The establishment and operation of PipeChina has led to a rational separation of the competitive production and supply segments of China’s oil and gas market from the midstream monopoly segment of storage and transportation. A great change has taken place in the structure of the natural gas market, which is a breakthrough progress in the reform of our oil and gas system. This paper analyzes the institutional reforms and practices of three types of gas pipeline infrastructure, namely pipelines, ING receiving stations and storage depots, before and after the establishment of PipeChina, and finds that the reform has made progress in five areas: (1) independent ownership of trunk pipeline infrastructure; (2) integration of some provincial networks into the national pipeline network in a market-oriented manner; (3) initial establishment of rules for price management and cost monitoring under the system of separation of transportation and sales; (4) improved opening of spare capacity to third parties; and (5) initial formation of the regulatory system. However, five shortcomings were also pointed out: (1) there are shortcomings in the construction and development of pipeline infrastructure; (2) the operation rules of pipeline network need to be refined and improved; (3) the degree of information disclosure needs to be improved; (4) supervision system construction needs to be strengthened; (5) the integration of provincial network into the national management network needs to be deepened. In turn, seven recommendations were made: (1) accelerate the improvement of natural gas infrastructure capacity; (2) improve the rules of operation and dispatch of pipeline networks; (3) establish an interconnected national network that separates transport and sales; (4) promote pricing reform of pipeline transport services through regional pilot; (5) improve the regulatory system based on open information and fairness; (6) allow opening exemptions for some pipe network infrastructure; (7) enhance the adaptability of infrastructure to the “double carbon goals.”