A reform of natural gas prices is the key to the industry's growth, agreed administrators and scholars at the 4th Peking University (PKU) and Sate-Owned Enterprises (SOE) Forum held in Beijing on December 28.

"China's supply-side reform of the national energy structure will bring opportunities to the natural gas industry," Jia Ailin, Director of the Erdos Branch of the Research Institute of Petroleum Exploration and Development, said. "The China National Petroleum Corp. (CNPC) has responded positively, contributing over 70 percent of China's natural gas output in 2015."

However, according to Jia, the huge demand for natural gas is also increasing the pressure on suppliers. Long-term development target should be maintaining a sustainable and stable supply of natural gas.

While the Chinese Government is ambitious about its development of natural gas, it is hard for the market to consume as much as the government has planned. In 2015, consumption of natural gas occupied around 6 percent of all primary energy, while the target for 2020 set in an action plan issued by National Energy Administration in 2014 is 10 percent.

It is because China's natural gas market is not mature enough, said Shi Dan, Party Secretary of the Institute of Industrial Economics with the China Academy of Social Sciences. According to Shi, though China's natural gas consumption composes a large portion of the global total consumption, it is only a small slice of China's domestic energy consumption. Besides, the high prices and frequent changes in supply and demand are also disadvantageous factors.

"Chinese government inked action plans on encouraging the use of natural gas. Now we must streamline our pricing system and deepen the price reform in the industry."said Shi.

"Price is a tool which can help adjust supply and demand, and in the new pricing system, we also need to produce a fair distribution of cost amongst all production procedures," Shi said. " SOEs should shoulder the responsibility of ensuring national energy security, and at the same time share the costs of the reform."

Liu Yijun, a professor from China University of Petroleum, agreed with Shi on the necessity of price reform.

Liu concluded the reform is urgent since a dual-track approach, a separated pricing system for residential and non-residential needs, still remains. Also, bundling pricing--adding the cost of gas pipelines into the price of natural gas--is detrimental to industry's long-term development.

Copyedited by Byran Michael Galvan

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