for the Regulation of Fair and Open Access to
Oil and Gas Pipeline Networks and the Measures
for the Administration of Natural Gas Infrastructure Deployment and Operation will be
improved, and the Rules for the Implementation
of Fair, Open Access to Natural Gas Infrastructure will be developed. These rules and regulations will define how infrastructure operators will
maintain independent operation and provide
various services, such as pipeline transmission,
to all users in a fair and just manner. They will
also define rules for pipeline access, information
disclosure requirements and legal liability for
breach of fairness and openness.
Progressively eliminate restrictions to diversify investment. Restrictions will be progressively
eliminated to allow and encourage the investment of private capital in pipeline deployment
and operation.
Strengthen the supervision and approval of
transmission and distribution pricing to reduce
transmission and distribution costs. Following
the principle of “controlling power transmission
and distribution, and deregulating power generation, sales and use” in the power industry, a
pricing system should be established to verify
independent gas transmission and distribution
costs. It should be based on allowable cost, plus
reasonable profit, and include constraints and
incentives,
Create standards and plans to interconnect
pipeline networks. The government should make
plans regarding investment, construction, operation and pricing criteria for crude oil, natural gas
and oil product pipelines.
4.5.3 Improve Oil and Gas Pricing
Mechanisms
and Progressively
Deregulate Oil and Gas
Pricing
Improve the oil product pricing mechanism. It is
advisable to deregulate domestic oil product
pricing step by step, allowing it to be determined
by supply and demand.
Progressively deregulate natural gas pricing.
In the near term, China will:
(i) carry out pilot programmes to deregulate
the end-use retail price of natural gas;
(ii) introduce price incentive policies, such as
interruptible supply pricing and peak and
off-peak gas prices;
(iii) determine the relationship between residential and non-residential gas prices and
gradually eliminate cross-subsidies between
residential and industrial/commercial gas
consumption; and
(iv) improve directional subsidy and relief
mechanisms for the most vulnerable
households and some non-profit industries.
In the medium to long terms, once upstream
operators are diversified, third parties have fair
access to infrastructure, and prices at the natural
gas exchange reflect supply and demand, China
will fully deregulate gas supply and sales pricing,
leaving it to be determined by the market.
4.5.4 Standardise Government
Administration and Create
an Effective Regulatory
System for Oil and Gas
China will:
(i) promote policymaker-regulator separation;
set up independent, unified and specialised
regulatory authorities; and improve the
vertical regulatory system at national and
provincial levels;
(ii) consider setting up an independent centralised energy supervision system within
the National People’s Congress, define
regulatory responsibilities (mainly economic) and strengthen social regulation to
ensure fair competition in natural monopoly segments such as network infrastructure (mostly pipelines); and
(iii) improve the efficiency of government
regulation; give regulatory priority to
processes and activities such as market
access, trading behaviour, monopoly segments, tax payments, pricing, security and
environmental protection; and use a combination of approaches including laws,
Overview: High-Quality Energy for High-Quality Growth …
35
Oil and Gas Pipeline Networks and the Measures
for the Administration of Natural Gas Infrastructure Deployment and Operation will be
improved, and the Rules for the Implementation
of Fair, Open Access to Natural Gas Infrastructure will be developed. These rules and regulations will define how infrastructure operators will
maintain independent operation and provide
various services, such as pipeline transmission,
to all users in a fair and just manner. They will
also define rules for pipeline access, information
disclosure requirements and legal liability for
breach of fairness and openness.
Progressively eliminate restrictions to diversify investment. Restrictions will be progressively
eliminated to allow and encourage the investment of private capital in pipeline deployment
and operation.
Strengthen the supervision and approval of
transmission and distribution pricing to reduce
transmission and distribution costs. Following
the principle of “controlling power transmission
and distribution, and deregulating power generation, sales and use” in the power industry, a
pricing system should be established to verify
independent gas transmission and distribution
costs. It should be based on allowable cost, plus
reasonable profit, and include constraints and
incentives,
Create standards and plans to interconnect
pipeline networks. The government should make
plans regarding investment, construction, operation and pricing criteria for crude oil, natural gas
and oil product pipelines.
4.5.3 Improve Oil and Gas Pricing
Mechanisms
and Progressively
Deregulate Oil and Gas
Pricing
Improve the oil product pricing mechanism. It is
advisable to deregulate domestic oil product
pricing step by step, allowing it to be determined
by supply and demand.
Progressively deregulate natural gas pricing.
In the near term, China will:
(i) carry out pilot programmes to deregulate
the end-use retail price of natural gas;
(ii) introduce price incentive policies, such as
interruptible supply pricing and peak and
off-peak gas prices;
(iii) determine the relationship between residential and non-residential gas prices and
gradually eliminate cross-subsidies between
residential and industrial/commercial gas
consumption; and
(iv) improve directional subsidy and relief
mechanisms for the most vulnerable
households and some non-profit industries.
In the medium to long terms, once upstream
operators are diversified, third parties have fair
access to infrastructure, and prices at the natural
gas exchange reflect supply and demand, China
will fully deregulate gas supply and sales pricing,
leaving it to be determined by the market.
4.5.4 Standardise Government
Administration and Create
an Effective Regulatory
System for Oil and Gas
China will:
(i) promote policymaker-regulator separation;
set up independent, unified and specialised
regulatory authorities; and improve the
vertical regulatory system at national and
provincial levels;
(ii) consider setting up an independent centralised energy supervision system within
the National People’s Congress, define
regulatory responsibilities (mainly economic) and strengthen social regulation to
ensure fair competition in natural monopoly segments such as network infrastructure (mostly pipelines); and
(iii) improve the efficiency of government
regulation; give regulatory priority to
processes and activities such as market
access, trading behaviour, monopoly segments, tax payments, pricing, security and
environmental protection; and use a combination of approaches including laws,
Overview: High-Quality Energy for High-Quality Growth …
35