‘Low-hanging fruit’? Direct supply in China’s natural gas market reform

Abstract

Abstract This article is one of the first systematic discussions of the legal and regulatory aspects of direct supply in China’s gas market reform. By allowing large users to bypass urban gas companies and negotiate directly with upstream producers, direct supply can propel China’s gas sector towards a higher degree of marketization. Among the range of measures undertaken to reform the gas market, direct supply has received far less attention. Nevertheless, China’s regulators and policymakers at the central and sub-national levels have increasingly acknowledged the key role of direct supply in reducing the cost of gas and fostering more market competition. However, the remaining challenges to the implementation of direct supply are multiple and mainly originate from the extant restraints posed by the Chinese regulatory system governing the gas sector. Against this background, this article argues that the localized implementation of direct supply represents a ‘low-hanging fruit’ in China’s gas market reform.