Natural Gas Trade Game With Export Preference And Import Gas Reserve

Walking into the kitchen,lighting the natural gas stove and preparing to cook,which is a very common thing for thousands of families in the daily life.When the natural gas supply is cut off occasionally,the gas supply company will inform us in advance and restore the gas supply as soon as possible.People do not seem to worry about there is no gas to use.However,due to the obvious regional imbalance in the global production and consumption of natural gas,many countries rely heavily on the import of natural gas,which makes the seemingly stable and reliable natural gas supply often accompanied by the natural gas import and export game among big powers.China has become a net importer of natural gas since 2006,and surpassed Japan in2018 to become the world’s largest natural gas importer.And China’s external dependence on natural gas has exceeded 42% by 2020.Although China has obtained a large amount of overseas natural gas resources through investment and unique diplomacy.However,due to the differences in economic,political,cultural,religious and other aspects between natural gas importers and exporters,the natural gas exporters may show distinct export preferences to different natural gas importers.The export preference related to geopolitics has become one of the important factors affecting the reliability of natural gas supply.On the other hand,in order to ensure the reliability of natural gas supply,the importers often use the natural gas reserve as an important means of coping with gas supply interruptions.In recent years,the uncertainty of the global natural gas market makes the natural gas reserve attract much attention.Moreover,such a change in the gas reserve behavior of importers will have an important impact on the natural gas market.From this,this paper mainly analyzes the natural gas trade game under different information structures from the perspective of the natural gas exporter’s export preference and importer’s gas reserve.Firstly,from the perspective of the importers and exporters simply pursuing profit maximization,a multi-country dynamic game model of natural gas trade is constructed and analyzed.Then,the export preference as an important factor is introduced into the dynamic game of natural gas trade,and its influence on the equilibrium strategy of importers and exporters is analyzed.Finally,by constructing two game models,the effects of importer’s gas reserve and reserve preference on natural gas import and export equilibrium strategy are analyzed theoretically.The specific analysis and results include the following four aspects:Firstly,the natural gas import and export game under the influence of a pure profit target.In this part,a dynamic game model in which the importers and exporters simply pursue profit maximization is constructed,and the state feedback equilibrium solution of the model is solved under two different information structures: a simultaneous game and a Stackelberg game in which exporter is the leader.Results show that,under these two different information structures,this model has a unique state feedback equilibrium solution.The higher the concentration degree of the natural gas trade market,the slower the convergence rate of exporter’s gas exploitation.Compared with the simultaneous game,the total welfare of the importer is smaller,but the total profit of the exporter is larger,and the sum of the welfare of the importer and exporter is also larger.In the Stackelberg game,as the number of importers increases,the exporter will lose its advantage of being the leader,and the whole trade market is closer to the situation of the simultaneous game.Secondly,the natural gas trade game with export preference and insufficient supply risk.Considering that the natural gas exporter may face the risk of insufficient natural gas supply at home,this paper integrates the exporter’s insufficient supply risk and export preference into a unified dynamic game model,and analyzes the state feedback equilibrium strategy and its policy implications under two different information structures: a simultaneous game and a Stackelberg game.The study finds that the insufficient supply risk can weaken the advantage of the leader in the Stackelberg game and reduce the disadvantage of the follower,while the export preference can strengthen the advantage of the leader and increase the disadvantage of the follower.The convergence rate of natural gas exploitation decreases with the increase of insufficient supply risk,and it rises first and then falls with the increase of export preference.From the sum of the welfare of the importer and exporter aspect,the simultaneous game is better than the Stackelberg game.Thirdly,import and export strategy under natural gas reserve and exploitation technology investment.Based on the natural gas importer carries out reserve and price control for the sake of economic benefit and supply safety,while the natural gas exporter invests in exploitation technology to maximize economic benefit.Under this condition,a dynamic game model of an importer and an exporter is presented.The optimal control theory is used to analyze the optimal natural gas consumption and reserve of the importing country,as well as the optimal technology investment and export quantity of the exporting country.The research shows that the investment efficiency and the investment cost coefficient,as well as the reserve preference and selling price,have an important influence on the import and export strategy.The steady-state utility of reserve and the total utility of the importer are both inverted “U”with the selling price.And when the former reaches the maximum,the selling price is lower than that of the latter.The importer’s price control may cause the reserve to deviate from its initial purpose,and even lead to a result completely opposite from the expected.The study also finds that,while the exporter could use its monopolistic power to avoid the adverse effects generated by the gas importer,such as price controls,it may also lose the potential increase in market share due to changes in the importer’s reserve preference.Fourthly,game of natural gas import between China and the EU under reserve preferences.China is currently the world’s largest natural gas importer,but its gas reserves are relatively low compared with the European Union.To ensure its reliable gas supply,China will raise its gas reserves significantly in response to uncertainties in the future.A change in China’s natural gas reserve level will change the global natural gas market demand.And this will also affect the EU’s gas import strategy because now Russia’s pipeline natural gas is connected to China.To theoretically analyze the potential impact of China’s natural gas reserve on different gas import games with different information structures,an import game model between China and the EU in the Russian natural gas market was established.The research shows that when only China can adjust its reserve preference,its benefit in a simultaneous game could reach that of the leader in a Stackelberg game,but the EU’s benefit will shrink.If both China and the EU are allowed to adjust their reserves,both profits may fall due to excessive reserves,but Russia’s producer surplus will rise.With the increase of China’s economic growth and increasing environmental pressure such as carbon emissions,natural gas is expected to be the fastest-growing fossil energy source in the coming decades.Therefore,the gap between China’s gas supply and demand may continue to increase,and the gas import dependence is likely to rise further.This paper makes a theoretical analysis of the natural gas trade game from the perspective of the natural gas exporter’s export preference and importer’s gas reserve,which is helpful to understand and perfect the natural gas trade game theory,and it also helps to provide some reference for importers and exporters to guarantee the security of natural gas supply.