Evaluating natural gas supply security in China: An exhaustible resource market equilibrium model

Abstract

The continuous growth of natural gas demand in China has brought about supply security from the insufficient supply of domestic resources and ever-increasing dependency on natural gas imports. A multi-agent game framework for supply security is proposed to investigate availability, accessibility, and affordability along natural gas industry and supply chain. In this framework, an exhaustible resource market equilibrium model based on mixed complementary programming (MCP) is developed, taking into account the dynamic depletion of the remaining recoverable reserves, to evaluate the gas supply security in China. The results indicate the supply security of China's natural gas is far from optimistic from 2020 to 2049, and the newly-increased recoverable reserves of 200 bcm/a are required to meet the expanding scale of the natural gas market. However, it will face supply risks with lower Reserve-Production ratios after 2030 and higher dependencies after 2040. Therefore, the equilibrium model is used to simulate for seeking feasible solutions to ensure the natural gas supply security from three aspects: market structure, discount rate, and resources tax. Several combinational strategies suitable for China's natural gas supply security are suggested according to the market structure, natural gas import, discount rate, and resources tax for building a more diversification system of natural gas supply, establishing an efficient allocation system of the natural gas market and setting up an effective strategic stockpile system of natural gas resources.