and curtailment will be thoroughly addressed,
and inter-provincial transmission will be incorporated into the national strategy for long-term
power transmission and use. Power generation
will be completely deregulated and new energy
generation in all regions will be guaranteed the
sale of a minimum number of hours per year.
Peak shaving and standby auxiliary service
market mechanisms will be completed, motivating improvements to fossil power flexibility and
the deployment of new peak shaving and energy
storage facilities. Spot energy markets will be
formed to benefit from the lower marginal cost of
renewable energy.
(4) Creating an effective energy regulation
system
China will separate administration from regulation, establishing independent and professional
regulators, and building on the dual-level (central
and regional) regulatory system. The responsibilities of regulators will be clearly defined,
focusing on economic aspects, while regulation
of the societal dimension will be enhanced to
ensure fair competition in natural monopoly
segments like pipeline infrastructure. Regulatory
capacity and efficiency will be improved to
maintain fairness in market competition.
(5) Creating a modern energy legislation
system
China will adopt its Energy Law to provide a
legal basis for the creation and revision of other
energy-related laws and regulations. The Electric
Power Law will be revised, the Oil and Gas Law
will be researched and drafted, and the Coal Law
will be improved, all of which will provide a
legal basis for the creation, implementation,
assessment, supervision and adjustment of
power, coal, oil and gas strategies. The Energy
Conservation Law and Renewable Energy Law
will be implemented, while consistent regulatory,
coordination, holistic decision-making and public consultation mechanisms will be formed or
improved. Studies will be carried out on
formulating the Energy Regulation Provisions,
and energy regulatory rules, methods and procedures will be created.
5 Reforming the Oil and Gas Sector
5.1 Progress in the Reform of China’s
Oil and Gas Sector
The pace of market-oriented reform of China’s
oil and gas sector accelerated after the 18th
National Congress of the Communist Party of
China in 2012. A series of reform policies and
measures
covering
upstream
access,
market-based pricing, pipeline network reform,
market regulation, and management of crude oil
imports and exports was introduced. The Central
Committee of the Communist Party of China and
the State Council unveiled the Opinions on
Deepening
the
Reform of
the
Oil
and Gas Industry in May 2017, which defines
the direction, targets, methods and tasks of
reform. The move to reform the oil and gas
industries energised the market, enabling it to
allocate oil and gas resources fairly and create a
favourable policy environment for the sustainable and steady development of China’s oil and
gas industries.
5.1.1 Pilot Mining Rights Reform
of Upstream Resources Has
Made Great Progress
Due to the long-term monopoly in oil and gas
exploration and production in China, mining
rights are highly concentrated in several large
state-owned oil and gas corporations, making it
difficult for private capital to gain access to
upstream resources. Because the mining rights
transfer and exit system is defective, the mining
rights market cannot operate efficiently, and
barriers to trade are common, leading to low oil
and gas exploration, poor exploitation efficiency
and insufficient investment. To resolve these
problems, the Chinese government has launched
pilot oil and gas mining rights management
reform programmes.
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S. Yaodong and A. Gillespie
and inter-provincial transmission will be incorporated into the national strategy for long-term
power transmission and use. Power generation
will be completely deregulated and new energy
generation in all regions will be guaranteed the
sale of a minimum number of hours per year.
Peak shaving and standby auxiliary service
market mechanisms will be completed, motivating improvements to fossil power flexibility and
the deployment of new peak shaving and energy
storage facilities. Spot energy markets will be
formed to benefit from the lower marginal cost of
renewable energy.
(4) Creating an effective energy regulation
system
China will separate administration from regulation, establishing independent and professional
regulators, and building on the dual-level (central
and regional) regulatory system. The responsibilities of regulators will be clearly defined,
focusing on economic aspects, while regulation
of the societal dimension will be enhanced to
ensure fair competition in natural monopoly
segments like pipeline infrastructure. Regulatory
capacity and efficiency will be improved to
maintain fairness in market competition.
(5) Creating a modern energy legislation
system
China will adopt its Energy Law to provide a
legal basis for the creation and revision of other
energy-related laws and regulations. The Electric
Power Law will be revised, the Oil and Gas Law
will be researched and drafted, and the Coal Law
will be improved, all of which will provide a
legal basis for the creation, implementation,
assessment, supervision and adjustment of
power, coal, oil and gas strategies. The Energy
Conservation Law and Renewable Energy Law
will be implemented, while consistent regulatory,
coordination, holistic decision-making and public consultation mechanisms will be formed or
improved. Studies will be carried out on
formulating the Energy Regulation Provisions,
and energy regulatory rules, methods and procedures will be created.
5 Reforming the Oil and Gas Sector
5.1 Progress in the Reform of China’s
Oil and Gas Sector
The pace of market-oriented reform of China’s
oil and gas sector accelerated after the 18th
National Congress of the Communist Party of
China in 2012. A series of reform policies and
measures
covering
upstream
access,
market-based pricing, pipeline network reform,
market regulation, and management of crude oil
imports and exports was introduced. The Central
Committee of the Communist Party of China and
the State Council unveiled the Opinions on
Deepening
the
Reform of
the
Oil
and Gas Industry in May 2017, which defines
the direction, targets, methods and tasks of
reform. The move to reform the oil and gas
industries energised the market, enabling it to
allocate oil and gas resources fairly and create a
favourable policy environment for the sustainable and steady development of China’s oil and
gas industries.
5.1.1 Pilot Mining Rights Reform
of Upstream Resources Has
Made Great Progress
Due to the long-term monopoly in oil and gas
exploration and production in China, mining
rights are highly concentrated in several large
state-owned oil and gas corporations, making it
difficult for private capital to gain access to
upstream resources. Because the mining rights
transfer and exit system is defective, the mining
rights market cannot operate efficiently, and
barriers to trade are common, leading to low oil
and gas exploration, poor exploitation efficiency
and insufficient investment. To resolve these
problems, the Chinese government has launched
pilot oil and gas mining rights management
reform programmes.
454
S. Yaodong and A. Gillespie