and harmonious, so synergies cannot be created.
For example, the positioning of natural gas
development strategies is not clear, and the
scepticism about the cleanness of natural gas
needs to be addressed. Plans for the oil and gas
sector, limited to seeking advice, are not harmonious with other plans, such as those for land,
the sea and natural reserves. Key content is not
well aligned. In addition, national oil and gas
pipeline construction plans do not incorporate
local government plans for land and urban and
rural development, making coordination during
implementation difficult. And industry associations do not play their roles to the required
extent.
The regulatory system is incomplete. First, the
functions and duties of oil and gas authorities are
decentralised. The policy goals of central and
local government departments are different and
their work rate is not aligned, making coordination difficult. Second, regulatory activities do not
have a clear interface. Their efficiency is poor
and their effects are weak. The absence of relevant laws and regulations means that there is
insufficient basis for effective problem solving.
For instance, China has not yet developed an
energy law, an oil and gas law or natural gas law,
and the policies related to opening pipeline networks and gas infrastructure to third parties are
issued by ministries or commissions in the form
of circulars or measures. Third, there is not
enough diversification in the regulators and the
means of regulation, making it difficult to
implement reforms that call for “administrative
streamlining, delegation of powers and service
optimisation”. Government regulators rely
mainly on standard administrative methods and
peer-to-peer supervision and review.
5.3 Objectives of Oil and Gas
Industry Reform
5.3.1 The Idea Behind the Reform
Reform of China’s oil and gas industry is guided
by Xi Jinping’s Thoughts on Socialism with
Chinese Characteristics for a New Era, the 19th
National Congress of the Communist Party of
China in 2017, the 2nd and 3rd Plenary Sessions
of the 19th Central Committee of the Communist
Party of China in 2017, and the development
concepts of “Innovation, Coordination, Green,
Openness and Sharing”. The reforms should be
implemented across the whole oil and gas value
chain in an orderly manner, with the focus on
supply-side structural reform, including exploration and production, pipeline transmission,
circulation, refining and chemicals, enterprise
reform, government regulation, and the enactment, amendment and abolition of oil and gas
regulations. The relationship between the market
and government should be clarified to enable the
market to play a decisive role in resource allocation and the government to play a more efficient role.
5.3.2 Basic Principles
The market’s decisive role in resource allocation
should be given full play. Industry characteristics
and the laws of market development should be
followed. Barriers to entry and monopolies in the
oil and gas industry should be eliminated to
enable eligible market participants to enter
competition-based sectors. This will improve
competition and efficiency, energise the market
and raise oil and gas supply capacity. In addition,
government should play a more efficient role in
macroeconomic regulation, market supervision
and regulation, and service provision.
Oil and gas is an integral part of the nation’s
economy. Reform of the oil and gas sector has a
direct impact on economic development, resource
security and environmental safety, people’s
livelihoods and social stability. Its positive and
adverse impacts on the social economy should be
fully considered. Industry characteristics and the
laws of the market economy should be followed
to reform upstream, midstream and downstream
in an orderly and problem-oriented manner. An
overall reform plan that clearly defines the
direction and goals of reform should be developed, targeting breakthroughs at key points of the
plan and implementing pilot projects to gain
experience and test solutions.
China is a large oil and gas producer and
consumer. Ensuring national energy security
Special Report 4: China’s Energy System Revolution
463
For example, the positioning of natural gas
development strategies is not clear, and the
scepticism about the cleanness of natural gas
needs to be addressed. Plans for the oil and gas
sector, limited to seeking advice, are not harmonious with other plans, such as those for land,
the sea and natural reserves. Key content is not
well aligned. In addition, national oil and gas
pipeline construction plans do not incorporate
local government plans for land and urban and
rural development, making coordination during
implementation difficult. And industry associations do not play their roles to the required
extent.
The regulatory system is incomplete. First, the
functions and duties of oil and gas authorities are
decentralised. The policy goals of central and
local government departments are different and
their work rate is not aligned, making coordination difficult. Second, regulatory activities do not
have a clear interface. Their efficiency is poor
and their effects are weak. The absence of relevant laws and regulations means that there is
insufficient basis for effective problem solving.
For instance, China has not yet developed an
energy law, an oil and gas law or natural gas law,
and the policies related to opening pipeline networks and gas infrastructure to third parties are
issued by ministries or commissions in the form
of circulars or measures. Third, there is not
enough diversification in the regulators and the
means of regulation, making it difficult to
implement reforms that call for “administrative
streamlining, delegation of powers and service
optimisation”. Government regulators rely
mainly on standard administrative methods and
peer-to-peer supervision and review.
5.3 Objectives of Oil and Gas
Industry Reform
5.3.1 The Idea Behind the Reform
Reform of China’s oil and gas industry is guided
by Xi Jinping’s Thoughts on Socialism with
Chinese Characteristics for a New Era, the 19th
National Congress of the Communist Party of
China in 2017, the 2nd and 3rd Plenary Sessions
of the 19th Central Committee of the Communist
Party of China in 2017, and the development
concepts of “Innovation, Coordination, Green,
Openness and Sharing”. The reforms should be
implemented across the whole oil and gas value
chain in an orderly manner, with the focus on
supply-side structural reform, including exploration and production, pipeline transmission,
circulation, refining and chemicals, enterprise
reform, government regulation, and the enactment, amendment and abolition of oil and gas
regulations. The relationship between the market
and government should be clarified to enable the
market to play a decisive role in resource allocation and the government to play a more efficient role.
5.3.2 Basic Principles
The market’s decisive role in resource allocation
should be given full play. Industry characteristics
and the laws of market development should be
followed. Barriers to entry and monopolies in the
oil and gas industry should be eliminated to
enable eligible market participants to enter
competition-based sectors. This will improve
competition and efficiency, energise the market
and raise oil and gas supply capacity. In addition,
government should play a more efficient role in
macroeconomic regulation, market supervision
and regulation, and service provision.
Oil and gas is an integral part of the nation’s
economy. Reform of the oil and gas sector has a
direct impact on economic development, resource
security and environmental safety, people’s
livelihoods and social stability. Its positive and
adverse impacts on the social economy should be
fully considered. Industry characteristics and the
laws of the market economy should be followed
to reform upstream, midstream and downstream
in an orderly and problem-oriented manner. An
overall reform plan that clearly defines the
direction and goals of reform should be developed, targeting breakthroughs at key points of the
plan and implementing pilot projects to gain
experience and test solutions.
China is a large oil and gas producer and
consumer. Ensuring national energy security
Special Report 4: China’s Energy System Revolution
463