The oil and gas reform takes a significant step forward: New regulations aim to "control the middle."

China’s oil and gas market-oriented reform has once again reached a milestone with the recent release of the "Measures for Fair Open Supervision of Oil and Gas Pipeline Facilities" (hereinafter referred to as the "Supervisory Measures") by the National Development and Reform Commission and the National Energy Administration. As the first departmental regulation issued in the field of oil and gas pipeline supervision since China’s oil and gas market reform entered deeper waters, these measures introduce a series of innovative arrangements focusing on key aspects such as "what to regulate, who will oversee it, and how to carry out the oversight." Industry insiders believe that under this initiative, the efficiency of oil and gas pipeline resource allocation will significantly improve in the future, accelerating the release of potential for increased production and supply.

Oil and gas pipeline facilities connect the upstream and downstream sectors, representing a typical natural monopoly in the oil and gas industry. Promoting fair and open access to these facilities is a key component of the reform in the operational mechanisms of oil and gas pipelines. The establishment of regulatory frameworks for ensuring fair and open access to national oil and gas pipeline infrastructure began with the trial regulatory measures issued in 2014. After five years of pilot implementation, these measures were officially formalized and put into effect as standardized documents in 2019.

As of 2024, China's total mileage of long-distance oil and gas pipelines has reached 195,000 kilometers. The original regulatory measures have played a significant role in breaking monopolies, enhancing pipeline network utilization efficiency, and fostering diversified market players. However, with the continuous deepening of China's oil and gas system reform—particularly since the establishment of the National Pipeline Group—and guided by the overarching reform principle of "controlling the middle while liberalizing both ends"—the "X+1+X" oil and gas market structure is gradually taking shape. This structure features multiple entities and channels supplying upstream oil and gas resources, a unified and efficient midstream pipeline network for transportation, and a downstream sales market characterized by robust competition. Consequently, market participants are increasingly demanding fair and open access to these critical infrastructure networks.

Bai Jun, Vice President of the Beijing Gas Research Institute, noted that in response to new situations and requirements, the newly issued "Regulatory Measures" have undergone two significant changes compared to the previous regulatory framework: First, it has been elevated from a normative document to a departmental regulation, thereby enhancing the authority of supervision. Second, certain regulatory requirements have been refined, and penalty provisions have been established, significantly boosting the deterrent effect of supervision.

A relevant official from the National Energy Administration explained that the newly released "Regulatory Measures" have been elevated to departmental regulations, introducing additional provisions on penalties for lack of fair and open access. At the same time, new clauses have been added regarding user registration and service acceptance procedures. Specifically, it is clarified that oil and gas pipeline network operators must establish detailed rules for user registration, clearly define the conditions and procedures for service acceptance, and develop implementation guidelines for capacity allocation. Furthermore, the measures encourage pipeline operators to adopt convenient methods such as online platforms to streamline service acceptance processes. These enhancements aim to further optimize response timelines for decentralized service requests across oil and gas pipeline networks, thereby improving the overall level of fair and open service delivery.

Information asymmetry is one of the core bottlenecks hindering the fair and open access to pipeline networks. The "Regulatory Measures" have also revised the provisions on information disclosure. Based on the type of information, relevant data pertaining to the fair and open access of oil and gas pipeline facilities will be categorized and disclosed accordingly. For foundational information such as the fair access system, user registration criteria, and procedures, relevant enterprises shall proactively disclose it to the general public. Meanwhile, for sensitive information like remaining capacity and operational status, enterprises should disclose it only to registered users, striking a balance between ensuring facility information security and meeting user needs.

Ma Yongsheng, an academician of the Chinese Academy of Engineering, pointed out that the "Regulatory Measures" focus on breaking down monopolistic barriers in pipeline networks. By standardizing information disclosure, strengthening integrity in contract performance, and ensuring non-discriminatory services, these measures aim to create a fair and equitable competitive environment for all market participants, thereby enhancing the efficiency of energy resource flow. This not only represents a sustained breakthrough in deepening oil and gas system reform but also serves as a critical cornerstone for advancing the construction of a unified national market. It injects core momentum into building a nationwide market system characterized by "free flow of factors, unified and transparent rules, and fair and orderly competition." Under this impetus, the efficiency of oil and gas pipeline network resource allocation is expected to improve significantly in the future, accelerating the release of potential for increased production and supply.

It is reported that the "Regulatory Measures" will come into effect on November 1, 2025. "Going forward, we will urge oil and gas pipeline facility operators to provide open-access services, closely monitor the implementation of fair open-access practices, continuously standardize the operation of oil and gas pipeline facilities, enhance the level of fair open-access services provided by these operators, and ultimately promote high-quality development in the oil and gas industry," said a relevant official from the National Energy Administration.

Source: Economic Information Daily