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The congestion cost of pipeline networks under third-party access in China's natural gas market

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  • Wei, Qi
  • Zhou, Peng
  • Shi, Xunpeng

Abstract

The consolidation of natural gas pipelines and the implementation of Third-Party Access (TPA) are two critical conditions of gas market liberalization that are being implemented in China, but their full impacts are insufficiently understood. This study employs a natural gas market equilibrium model to explore the utilization rate and congestion cost of China's long-distance pipelines, considering the economic properties of the pipelines. Except for the producer and the ending consumer, we envision the trader as a new agent based on the implementation of the TPA and improve the marketing behaviors of independent pipeline and storage operator agents covered in previous studies by adding independent transportation service and seasonal arbitrage. The results show that while the total utilization rate of long-distance pipelines is 87%, many pipeline segments are congested, which suggests that China's long-distance pipeline network has the potential for optimization. By introducing the congestion fee, this study identifies the pipelines that need structural optimization and capacity expansion. The results of this paper suggest that optimizing existing pipeline networks, deepening market liberalization, and developing a functional storage sector should be prioritized in China's gas market development.

Suggested Citation

  • Wei, Qi & Zhou, Peng & Shi, Xunpeng, 2023. "The congestion cost of pipeline networks under third-party access in China's natural gas market," Energy, Elsevier, vol. 284(C).
    • Handle: RePEc:eee:energy:v:284:y:2023:i:c:s0360544223019151
    DOI: 10.1016/j.energy.2023.128521
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