Analysis on Price Game and Supervision of Natural Gas Pipeline Tariff under the Background of Pipeline Network Separation in China

Abstract

In China, the separation of pipeline network effectively promotes the process of natural gas market-oriented reform and leads to the inclination of pipeline pricing autonomy to the middle party. In order to strengthen the safety of pipeline operation, PipeChina tends to increase the investment cost and increase the uncontrollability of pipeline price. Pipeline tariff is the bottleneck factor to adjust the revenue flow between shippers and carriers. Analyzing the behavior strategy choice of shippers and carriers in price game of pipeline transportation and exploring the supervision strategy of tariff are the key measures to ensure the virtuous cycle of natural gas industry chain. Combined with the results of strategic game among upstream companies, PipeChina and the Chinese government, it is found that PipeChina tends to overinvest in the construction of ‘luxury pipelines’, which delays the transportation of upstream companies. Therefore, it is urgent to introduce government supervision to regulate pipeline investment and operation cost. Therefore, China should actively improve the laws and regulations on tariff, promote the market mechanism of tariff, implement tariff based on the maximization of social welfare, and establish the ‘joint management committee’ of tariff inspection department, so as to reasonably regulate the pipeline tariff. This research was carried out with these main objectives to analysis on Price Game of Natural Gas Pipeline Tariff under the Background of Pipeline Network Separation and b) to Supervision Natural Gas Pipeline Tariff in China.