Study On China Natural Gas Pricing Mechanism

With the consideration of environment and sustainable development in21st century, natural gas becomes more and more important in the world energy consumption field. The pricing mechanism shall be a key role of the Natural Gas Industry. In China, our Natural Gas Pricing Mechanism is on a cost plus basis under the government control, which is calculated based on the average cost and reasonable profit. However, it is restricted to two pre-conditions, simple natural gas industry development and planned economy as leading post. With the development of Socialist Market Economy in China, natural gas market becomes more improving. The industry scale broadens rapidly. The market has different kinds of complex resources to supply natural gas, through the net-pipelines to the market covering the whole country. Those all work against the efficiency of the present natural gas price mechanism. So, it is essential to establish a new natural gas pricing mechanism. This essay analyses the character of natural gas industry chain and the price influence factors, learns the development of China natural gas industry and the limitation of our present pricing mechanism, compares our pricing mechanism with those overseas, and propose the suggestion on pricing mechanism reforms.The text is divided into six parts. The first part is the introduction of the background, significance, relative theories and of research methods of this essay. The second part is the presentation of natural gas, the industry chain and the price influence factors. The third part is the analysis of China present natural gas pricing mechanism and its limitation over the industry development. The fourth part is study on the experience of other countries’natural gas price mechanism all over the world. The fifth part is to propose my pricing formula and some other policies and measures suggestion. The last part is a conclusion.