On September 11th, it was reported that Shanghai Petroleum and Natural Gas Trading Center will jointly launch a pilot project for pipeline natural gas bidding trading with China Petroleum and Natural Gas Sales Branch.

Shanghai Petroleum and Natural Gas Trading Center recently announced that it plans to jointly launch a pilot project for pipeline natural gas bidding trading with China Petroleum and Natural Gas Sales Branch on September 12th, in order to promote natural gas marketization reform, enhance natural gas security capabilities, and facilitate upstream and downstream procurement.

According to the announcement, this bidding transaction will be piloted in the region where PetroChina Eastern Sales Company is located, and the trading volume will be natural gas delivered in September. The trading mode is specialized trading, mainly targeting users of natural gas contracts for PetroChina pipelines. Among them, users must have the membership qualification of trading center dealers.

Since 2017, the demand for natural gas has been strong, and the off-season is not weak. Due to increased environmental pressure, coal to gas projects have been launched one after another. It has become a consensus that the natural gas supply situation is not optimistic this winter and next spring. Industry experts predict that the peak to valley difference this year may reach 30:1, which will be significantly larger than in previous years, and there is greater uncertainty than before.

Industry insiders believe that as the Asian winter approaches, the volatile prices in the market have intensified. Relying on administrative measures to comprehensively regulate market supply and demand not only has many sequelae, but also is unsustainable. On the basis of ensuring basic supply and demand, breaking through the decisive barriers of market resource allocation, and relying on market resource allocation is the way out.

In this context, trading platforms such as Shanghai and Chongqing Oil and Gas Trading Centers have been entrusted with important responsibilities. The National Development and Reform Commission issued a notice on August 29th regarding the reduction of non residential natural gas benchmark station prices, which once again explicitly encourages natural gas production and operation enterprises and users to actively enter the natural gas trading platform for trading, and let the market determine the natural gas price.

Officials from Shanghai Petroleum and Natural Gas Trading Center stated that this bidding transaction will follow the trading rules of "price first, time first", and complete open and transparent transactions through appropriate and reasonable competition between buyers and sellers in the region, forming a fair transaction price. Before each regional bidding transaction, the trading center needs to prepare the registration bank account binding and other transaction conditions for all buyers and sellers who wish to participate in the bidding transaction in the region. The highest transaction price this time cannot exceed 20% of the benchmark price.

It is reported that before conducting pipeline gas bidding transactions, the trading center had already cooperated with China National Offshore Oil Corporation to conduct four LNG special bidding transactions for Zhejiang sales companies. Through LNG bidding trading, the teams of traders and trading centers have been trained, and the entire process from trading, settlement, and delivery has been tested, improving system performance and achieving satisfactory results.

Officials from PetroChina Natural Gas Sales Branch stated that vigorously promoting the rebalancing of supply and demand in the natural gas industry, improving the adaptability and flexibility of the industry's supply side structure to changes in demand, and promoting open and transparent trading of natural gas are important measures for natural gas production and operation enterprises to fulfill their obligations and implement policies. Starting from the overall situation and promoting the implementation of national policies, the company will release 3-6 billion cubic meters of natural gas from resource increment and imported LNG resources into the market through the Shanghai Petroleum and Natural Gas Trading Center trading platform in September, actively coordinating with the Shanghai Trading Center to open green channels for users in need.