China's natural gas sector regulation in the context of pipeline restructuring: towards independent gas pipeline operation?

The establishment of China National Oil and Gas Pipeline Network Corporation (PipeChina) is one of the most ambitious reforms of China's oil and gas industry to date. As a cleaner type of fossil fuel, natural gas is considered the preferred transition energy resource during China's transformation from fossil fuel-intensive to renewable energy. The strategic choice is to increase the proportion of natural gas in China's primary energy portfolio. The creation of PipeChina, through acquiring the pipeline assets from the national oil companies, is an essential part of the reform agenda to increase natural gas supply and consumption through a monopoly and independent midstream sector. Accompanying this change is the promulgation of two sets of regulations governing a new transmission tariff regime and third-party access, respectively. Given the nascency of China's gas pipeline restructuring, this article critically examines the regulations that underpin the independent operation of PipeChina. It discovers that enforcement of third-party access contradicts the existing regulations on gas concession rights. PipeChina's independent operation is also likely to be challenged by the regulatory uncertainties identified by this study. Therefore, the success of PipeChina to achieve the reform objectives largely depends on how these challenges can be addressed appropriately in the process of ongoing reform.