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Global impact of uncertainties in China’s gas market

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  • Xunpeng, Shi
  • Variam, Hari Malamakkavu Padinjare
  • Tao, Jacqueline

Abstract

This paper examines the uncertainties in Chinese gas markets, analyze the reasons and quantify their impact on the world gas market. A literature review found significant variability among the outlooks on China's gas sector. Further assessment found that uncertainties in economic growth, structural change in markets, environmental regulations, price and institutional changes contribute to the uncertainties. The analysis of China’s demand and supply uncertainties with a world gas-trading model found significant changes in global production, trade patterns and spot prices, with pipeline exporters being most affected. China's domestic production and pipeline imports from Central Asia are the major buffers that can offset much of the uncertainties. The study finds an asymmetric phenomenon. Pipeline imports are responding to China's uncertainties in both low and high demand scenarios while LNG imports are only responding to high demand scenario. The major reasons are higher TOP levels and the current practice of import only up to the minimum TOP levels for LNG, as well as a lack of liberalized gas markets. The study shows that it is necessary to create LNG markets that can respond to market dynamics, through either a reduction of TOP levels or change of pricing mechanisms to hub indexation.

Suggested Citation

  • Xunpeng, Shi & Variam, Hari Malamakkavu Padinjare & Tao, Jacqueline, 2017. "Global impact of uncertainties in China’s gas market," Energy Policy, Elsevier, vol. 104(C), pages 382-394.
    • Handle: RePEc:eee:enepol:v:104:y:2017:i:c:p:382-394
    DOI: 10.1016/j.enpol.2017.02.015
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    References listed on IDEAS

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    Cited by:

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    3. Miao, Xiaoyu & Wang, Qunwei & Dai, Xingyu, 2022. "Is oil-gas price decoupling happening in China? A multi-scale quantile-on-quantile approach," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 450-470.
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    6. Raquel Tebaldi & Anne Esser & Anna Davies Davidsen, 2017. "Promoting child- and gender-sensitive outcomes in cash transfer programmes: a review of different strategies in programme administration," Policy Research Brief 61, International Policy Centre for Inclusive Growth.
    7. Shi, Xunpeng & Shen, Yifan & Wu, Yanrui, 2019. "Energy market financialization: Empirical evidence and implications from East Asian LNG markets," Finance Research Letters, Elsevier, vol. 30(C), pages 414-419.
    8. Wei, Yi-Ming & Kang, Jia-Ning & Yu, Bi-Ying & Liao, Hua & Du, Yun-Fei, 2017. "A dynamic forward-citation full path model for technology monitoring: An empirical study from shale gas industry," Applied Energy, Elsevier, vol. 205(C), pages 769-780.
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    10. Zhou, Zhongbing & Qin, Quande, 2020. "Decoding China's natural gas development: A critical discourse analysis of the five-year plans," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    11. Nelson, Tim, 2018. "East-coast Australian gas markets—Overcoming the lumpiness of capital allocation and temporal instability," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 103-112.
    12. Chai, Jian & Wei, Zhaohao & Hu, Yi & Su, Siping & Zhang, Zhe George, 2019. "Is China's natural gas market globally connected?," Energy Policy, Elsevier, vol. 132(C), pages 940-949.
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    More about this item

    Keywords

    Q41; C35; Natural gas; Gas market; China; Uncertainty;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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