City-gas development in China--An NG perspective
Supply of piped gas in China has a long history but development was slow until the 21st century. The growing demand for cleaner fuel in the past ten years has encouraged domestic exploration and production of natural gas (NG) and the construction of long-haul pipelines linking upstream western regions of the country to downstream city-gas consumers in the eastern coastal areas. However, demand for NG in the cities is increasing so fast that recent winters have seen severe supply difficulties. This led to a government directive which set constraints on the domestic NG supplies and discouragement to gas power and petrochemical projects, and eventually to the Chinese government's willingness to accept the higher prices commanded by the international NG market. Nevertheless, the over demand situation has created a dominant market position for upstream NG producers and long-haul pipeline operators favouring their forward integration into downstream city-gas markets. Accordingly, pressures are building that may yet result in substantial pricing and regulatory reform in the city-gas industry.
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