New plan for oil and gas system reform: clear five key points of marketization

On June 26, the 36th meeting of the Central Comprehensive and Deepening Reform Leading Group reviewed and approved the Implementation Plan for the Reform of the Central Enterprise Company System, and required the completion of the restructuring of the state-owned enterprise system before the end of the year. The program complements the "Opinions on Deepening the Reform of the Oil and Gas System" issued by the Central Committee of the Communist Party of China and the State Council on May 21 (hereinafter referred to as the "Opinions"), which will further promote the reform of state-owned oil and gas enterprises closely related to the reform of the oil and gas system and accelerate the oil and gas The system reform plan has landed. From the content point of view, although the scheme is still insufficient, the effect of specific organization implementation is also uncertain, but the market reform direction and the reform goal of restoring energy commodity attributes are generally adhered to, and the upstream block opening and pipeline operation mechanism are deployed. Key reform tasks such as oil and gas import and export, refining and chemical wholesale and retail, oil and gas reserves, and reform of state-owned oil and gas enterprises are positive and important for accelerating market opening, promoting competition, promoting the development of oil and gas enterprises, and ultimately establishing a fair and open oil and gas market system. significance.

The basis and conditions for the reform of oil and gas system
In view of the history of the development of the oil and gas industry, its important position in the national economy and the intricate interests behind it, the "Opinions" have been formulated since the beginning of the period, and it took more than three years. This is the first oil and gas reform top-level design plan introduced at the national level after the implementation of “No. 38 Document” and “No. 72 Document”. It is the result of long-term game between all parties and the basic criterion for balancing the interests of all parties in the future. .
The Opinions reflect the specific requirements of the highest level to accelerate the energy production and consumption revolution. In June 2014, President Xi Jinping presided over the sixth meeting of the Central Financial and Economic Leading Group, proposing to promote the energy production and consumption revolution, and called for active promotion of the energy system reform, and efforts to formulate a comprehensive plan for power system reform and oil and gas system reform. In 2015, the ninth meeting of the Central Financial and Economic Leading Group and the Opinions on the Deepening Economic System Reform in 2015 issued by the National Development and Reform Commission all proposed to accelerate the reform of the oil and gas system. Since the beginning of this year, reforms in state-owned enterprises and reforms in the energy sector have been further accelerated. The National Development and Reform Commission has successively issued the "13th Five-Year Plan for Energy Development" and the "Revolutionary Strategy for Energy Production and Consumption 2016-2020", further clarifying the goals and directions of the oil and gas system reform, and clearing the policy obstacles to the market-oriented reform of oil and gas.
Changes in the domestic and international oil and gas market conditions have also provided rare conditions for reform. Since the second half of 2014, the international oil and gas market has undergone tremendous changes. Under the impact and influence of supply, demand, technology, geopolitics and other factors, the tight balance that has been going on for many years has been broken. At the same time, the slowdown in domestic economic growth and industrial transformation and upgrading have led to a corresponding slowdown in energy demand growth, rapid pressure on supply and supply, and a significant improvement in the energy security situation. Under the situation that oil and gas supply and demand at home and abroad are loose, prices are low, and energy structure transformation is accelerating, oil and gas companies actively control domestic production and substantially increase oil and gas imports. According to customs statistics, in 2016, China imported 381 million tons of crude oil, up 13.6% year-on-year, and import dependence exceeded 65%; imported natural gas was 72.1 billion cubic meters, up 17.4% year-on-year, and import dependence rose to 35%. At the same time, under the market situation of declining income and profits and severe production and management situation, some problems of state-owned oil companies have been exposed for a long time, and the willingness and motivation of active reforms have been rising.
In short, policy orientation and changes in the domestic and international market conditions have provided good conditions for the brewing and formulation of oil and gas system reform programs. It can be said that the reform plan was introduced at this time, the pressure on guaranteeing supply was small, the market impact was small, and social resistance was small.

Major contradictions and problems in the reform of oil and gas system
The full text of the Opinions has not yet been released, and it has not clearly pointed out the main problems in the current oil and gas system. However, the energy planning and strategy introduced at the sixth meeting of the Central Financial and Economic Leading Group and later introduced the contradictions and problems in the energy and oil and gas fields in terms of institutional mechanisms. It can be seen that there are long-standing consensuses on the problems existing in the oil and gas system, but many problems have existed for a long time. The reasons are complex. Historical and realistic factors, government and enterprises, state-owned and private, domestic and international factors and contradictions are interwoven in the oil and gas industry. Make it the most difficult area in China and the most difficult bones of previous reforms.

(1) Industry monopoly
Although China has established a relatively complete oil and gas industry system, the market scale is also expanding, but the openness of the oil and gas market lags behind the level of economic development and the development speed of domestic and foreign oil and gas industries, and the monopoly level remains high for a long time. In 1998, the establishment of the two major oil groups and the subsequent publications of “No. 38 Document” and “No. 72 Document” laid the oil and gas market pattern that has continued to this day. It is characterized by state-owned oil companies, foreign capital and private enterprises. The management function is transferred from the government to the state-owned enterprise, and the government controls the enterprise and the enterprise is highly dependent on the government. In the past 20 years, under the strong support and protection of national policies, state-owned oil companies have continuously strengthened their control over domestic oil and gas resources, infrastructure and major sales channels, and their dominant position has been continuously strengthened.
Throughout the middle and lower reaches of the Chinese oil and gas industry chain, the closer to the upstream, the higher the degree of monopoly. In the upstream exploration and development field, PetroChina, Sinopec, CNOOC and Yanchang Petroleum respectively enjoy the franchise of onshore and offshore oil exploration and exploitation, and have completed the block registration of about 80% of the land and sea sedimentary basin area, and strengthened the engineering technology through related transactions. Advantages in the fields of service, engineering construction, equipment manufacturing, etc.; oil and gas trade links, currently 5 companies with PetroChina, Sinopec, CNOOC, Zhuhai Zhenyu and Sinochem have state-owned crude oil trade qualifications and more than 40 non-state-owned trade enterprises. The non-state-owned trade import volume of crude oil is subject to quota management, which is formulated and distributed by the Ministry of Commerce every year; the pipeline transportation links, long-distance oil and gas pipeline networks, receiving stations and other infrastructures have natural monopoly attributes, and state-owned oil companies are essentially controlled through upstream and downstream integration. . The total mileage of China's onshore oil and gas pipelines has exceeded 120,000 kilometers (about 23,000 kilometers of crude oil pipelines, about 21,000 kilometers of refined oil pipelines, and about 76,000 kilometers of natural gas pipelines). Its central enterprises are 104,000 kilometers, accounting for 86%; There are 17 LNG receiving stations, and its central enterprise controls 16 seats. In the field of refining, wholesale and retail, the national refining capacity is about 750 million tons/year, of which three barrels of oil account for about 65%; more than 370 enterprises have the qualifications for wholesale oil products, and PetroChina, Sinopec, CNOOC, Sinochem and CAO Or holding companies accounted for about 22%; the number of gas stations nationwide is about 97,000, of which PetroChina (20,900) and Sinopec (30,600) account for about 53%. The downstream opening is higher than the upstream, but state-owned enterprises control most of the oil and gas resources and import and export quotas, and the development space of private oil and gas enterprises has been squeezed.

(2) Excessive administrative intervention
Although China's oil and gas market has been partially liberalized, the degree of marketization is still low in terms of pricing, market access, and competition. The entire industry has a strong planned economy, administrative control is widespread, management functions are cross-cutting, powers and responsibilities are unclear, management vacancies and management are offside, re-approval, light supervision, and administrative force to exclude competition, resulting in lack of vitality in the market and low operational efficiency. . The state-owned oil company's dominance and control over the entire industrial chain of the oil and gas industry also comes from the authorization and support of government departments.
After joining the WTO, especially in recent years, the state has introduced a series of policy measures to promote reforms in some aspects and areas of the oil and gas industry, but the pace and intensity of reforms still have a large gap with social expectations. Some reforms have not reached the expected level. effect. The price mechanism of refined oil and natural gas is still dominated by government regulation and guidance pricing, and there is a lag, which cannot be transmitted in time and fully reflects the changes in domestic and foreign markets. Especially in recent years, the international oil price has fallen. Although the government has adjusted the pricing mechanism of refined oil products, it has greatly increased the consumption tax on refined oil products. These interventions have hindered and effectively prevented the effective transmission of international oil prices, making the general public and related industries such as transportation not enjoying The benefits of falling international oil prices have affected the development of people's lives and the real economy. The refining and chemical production capacity has increased, and the national refining capacity has exceeded 100 million tons. There is a lack of uniform and strict mandatory quality standards for refined oil products. Under the severe environmental protection situation, there is no effective supervision and control for refineries producing inferior products. Means of punishment. In addition, government departments have imposed restrictions on the entry of social capital into the oil and gas industry through administrative examination and approval. This fully shows that administrative control is still the main obstacle to the reform of oil and gas marketization. There is still a big gap between the operation and management of China's oil and gas market and the mature international market.
In short, the most important problems of the oil and gas system are excessive administrative intervention and high monopoly of state-owned enterprises. This pattern can not adapt to the new trends, new patterns and new changes in the domestic and international oil and gas market, and is not conducive to the development of state-owned and private oil and gas enterprises and related industries. Expanding the opening up and accelerating market-oriented reforms are under the domestic and international energy trends. inevitable choice.

Highlights and limitations of the "new reform plan"
As the most comprehensive guiding document to promote the new round of oil and gas system reform, the Opinions not only clarified the guiding ideology, basic principles and overall thinking of the reform, but also deployed eight key reform tasks. It is the first oil and gas system in China in recent years. The top design of the sexual reform. However, the "Opinions" have not yet risen to the legal level, and some major substantive issues have not yet been broken, and the effects of specific organizational implementation are also uncertain. To a certain extent, the "Opinions" are more similar to the summary of some of the policy measures that have been implemented or piloted in the past three years, and there is still a certain gap with the expectations of the public and the industry.

(1) Highlights of the "new reform plan"
First, the reform objectives were clear, and reiterated and emphasized the adherence to market-oriented reforms and the characterization of energy commodity attributes. The domestic oil and gas market structure based on “No. 38 Wen” and “No. 72 Document” has been going on for nearly 20 years. Under the name of maintaining national energy security and becoming a strong and powerful state-owned enterprise, the market-oriented reform in the oil and gas field The progress is slow, and reforms in key areas are basically stalled. During this period, with the acceleration of economic globalization and regional economic integration, the international energy market, including energy concepts, energy structure, energy technology, energy supply and demand, etc. have undergone tremendous changes. The global and regional oil and gas markets are becoming more sophisticated, market controls are drastically reduced, and openness is increasing. From the 1980s to the beginning of this century, not only the developed countries and regions such as the United States, Europe, and Japan, but also the developing countries and regions such as South Korea, Indonesia, Taiwan, and India have basically realized the opening of the oil market.
Excessive administrative intervention and high monopoly of state-owned enterprises are the ills of China's oil and gas industry. The important reason for its existence is that the commodity attributes of energy have been weakened for a long time. With the formation and improvement of global and regional markets, energy has shifted from strategic materials to ordinary commodities. The Opinions emphasize that deepening the reform of the oil and gas system must adhere to the direction of problem orientation and marketization, and reflect the attributes of energy commodities. This is not only an active adaptation of changes in the international oil and gas market, but also a concrete implementation of the basic requirements for promoting the energy production and consumption revolution. In order to further break the administrative monopoly, manage the natural monopoly, liberalize the competition, and build a new and more equitable oil and gas market.
Second, the reform system is complete, covering all aspects and important areas of the oil and gas industry. In recent years, China has actively adapted to the changes in the international oil and gas market, and has accelerated its reform in the oil and gas sector. For example, it has continuously improved the formation mechanism of refined oil prices (2013, 2015), and introduced social capital into pipeline construction (June 2013). Some oil and gas blocks were piloted by bidding (July 2015), promoting the reform of mixed ownership of state-owned enterprises (September 2015), expanding the use of imported crude oil to some private refineries (2015, 2016), establishing oil and Natural Gas Trading Center (registered in 2015, run in 2016), etc. These policy measures have certain positive significance, but most of them are passive responses to some problems. They still stay in solving specific problems of a certain link or even a certain issue, and cannot solve fundamental problems for some long-standing outstanding problems.
The existing institutional mechanisms have been unable to effectively adapt to the international energy landscape, the changes in the domestic energy security situation and the objective requirements of the oil and gas market development. The entire oil and gas industry chain needs to be reformed through the top-level design. The Opinions is the most comprehensive guidance document for oil and gas reforms introduced in recent years. Its eight key tasks cover almost the entire industrial chain of exploration and development, import and export, pipe network, sales pricing, state-owned enterprise reform, oil and gas reserves, safety and environmental protection. . If the various reforms in the Opinions can be smoothly advanced, it will have far-reaching and important impact on the future development of the oil and gas industry and the adjustment of energy structure.
Third, there have been breakthroughs in key areas, especially the policy of oil and gas exploration and mining and pipe network with the highest degree of regulation and monopoly. The oil and gas industry has complex interests, long industrial chain, and related industries and personnel. The central government, local governments, state-owned enterprises, private enterprises, and consumers all have their own interests. Looking back at the policy changes and industry development process in the past two decades, we can find that the reform of the oil and gas sector has never been a simple economic issue, but a complex that can rise to the national strategy, state-owned asset management, and national energy security. The issue of interest distribution. Reforms in the oil and gas sector have been slow, and the root cause is that the government and state-owned enterprises that dominate the reform are also important stakeholders.
The monopoly of the oil and gas industry is deeply rooted, especially in the fields of exploration and development and pipe network operations. Almost all reforms are difficult to shake. Among the key reform tasks in the eight aspects of the Opinions deployment, the first is to improve and orderly release the oil and gas exploration and mining system, “allowing market entities that meet the entry requirements and obtain qualifications to participate in conventional oil and gas exploration and mining”; The third is to reform the operation mechanism of oil and gas pipeline network, and propose the goal of independent pipeline, separate transportation and sales, fair access, fair and open, and whether it can be realized, it has important and positive significance.

(2) Limitations of the "new reform plan"
First, there are still obvious signs of planned economy in the thinking and means of regulation. China has become the world's largest energy producer and consumer, and has become increasingly connected with the international market. It has the conditions to actively grasp, adapt, and even influence and lead the development direction of the global energy sector, improve the right to speak, and reform in some key areas. To reflect forward-looking strategic vision and thinking. However, throughout the "Opinions", its guiding ideology, basic principles, general ideas and key tasks are still at the level of guarantee, and have not yet shaken off the traditional mindset. There are also insufficient understandings of important issues such as development and changes in the oil and gas market at home and abroad, oil safety, oil and gas reserves, and the idea of ​​administrative intervention is still deeply rooted. The pattern of China's oil and gas market constructed and adjusted in accordance with the Opinions will remain a dual system of coexistence of plans and markets.
Second, the reform of some important fields and links involving private oil and gas enterprises is obviously insufficient. Private oil and gas companies have not been given equal opportunities for development with state-owned oil companies. At present, private oil and gas enterprises have become an important part of the domestic and international oil and gas market, and the economic strength and market influence have been continuously improved. However, in the "Opinions", private oil and gas companies are still subordinate.
In the oil field, the main obstacle to the development of private enterprises is the problem of oil sources. In order to obtain a stable and sufficient oil source, private oil companies have been striving for many years. In the "Opinions", although "allowing market participants who meet the entry requirements and obtain qualifications to participate in conventional oil and gas exploration and mining", the situation is not satisfactory from the pilot situation of the open bidding for oil and gas blocks in Xinjiang in 2015, the main reasons include Access thresholds are high, and high-quality blocks are difficult to obtain. In particular, the “Reform of Mining Rights Transfer System” issued in June this year requires strict restrictions on the transfer of mining rights agreements, which has added many restrictions and obstacles to the circulation and withdrawal of oil and gas blocks. Crude oil imports are another important way for private oil companies to obtain oil sources. But today, crude oil imports still distinguish between state-run trade and non-state-run trade, and the volume of non-state-run trade imports is still subject to quota restrictions. Since 2015, the state has allowed qualified refining to use imported crude oil on the premise of eliminating backward production capacity or building gas storage facilities. The import volume and operating rate of refinery crude oil have increased significantly. But this is limited to the relaxation of the right to use crude oil imports, rather than the free trade in the true sense. Moreover, the quota system for refined oil exports is still implemented, and private refineries are also difficult to obtain. In the field of natural gas, important issues facing private oil and gas companies are the use of pipe networks and receiving stations. From the "Opinions", the independence of the main pipeline, the separation of transportation and sales, and the fair opening to third-party market entities may take a long time, and there are certain obstacles in the coordination of many interest groups such as local governments.
Third, the reform and development ideas involving state-owned oil and gas enterprises are still not clear enough. The "Opinions" will deepen the reform of state-owned oil and gas enterprises as one of the eight key reform tasks, and regard mixed ownership, specialization and restructuring, and "slimming and fitness" as the focus and direction of the reform of state-owned oil and gas enterprises. The third batch of pilot ownership of central enterprises has not yet begun, but from the attempts of state-owned oil companies in the past few years, the effect of mixed ownership is not obvious because of the state-owned asset management system. The professional restructuring of state-owned oil companies has been ongoing, and all companies have made progress; however, it is difficult to divest and carry out social functions and solve historical problems because of too many interests and contradictions.
At present, state-owned oil and gas enterprises have developed into multinational companies with strong strength, and are fully capable of maintaining, consolidating and strengthening their competitive advantages through fair competition in the domestic market. However, for a long time, the government and enterprises in the oil and gas sector have not been divided. The government's inversion and exclusive support have weakened the motivation of state-owned companies to actively adapt to market changes and actively participate in domestic and foreign market competition. On the other hand, they will have a larger market share and stronger. Oil and gas companies with market control are placed at the disadvantage of public opinion. While Opinions strives to maintain the status and role of state-owned oil companies, it ignores the basic attributes of its market competition entities.

The direction and focus of continuing reform
As a national-level policy, the purpose and focus of institutional reform is to do a top-level design, coordinate the relationship between the market, government, enterprises, consumers, etc., and build a fair, open, and efficient oil and gas market. Even if the key tasks of the Opinions are implemented, the market-oriented reforms in China's oil and gas sector still need to be further promoted. The direction of deepening reform is to continue to promote marketization. The focus is to further clarify and deal with the relationship between the market and the government, the government and state-owned enterprises, state-owned enterprises and private enterprises.

(1) Clarify the general trend and raise awareness of energy security and energy properties
The international oil and gas industry is undergoing an important period of change. The macroeconomic environment, supply and demand situation, market leading forces, technological innovation, exchange rate fluctuations in pricing currencies, and people's traditional ideas and expectations about energy have all been major or even fundamental. The transformation. The focus of energy competition has shifted from resources to markets, and the means of ensuring energy security have shifted from production dependence to market dependence. Policy makers must have the thinking and strategy of an energy power, grasp the rhythm and trend of the international energy market, actively change ideas to adapt and lead this change, and actively promote the return of energy commodity attributes, and establish new energy security and energy markets. The concept of energy reserves makes policy adjustments forward-looking and strategic. As an important player in the international oil and gas market, oil and gas companies must seriously study and analyze major issues such as oil and gas technology advancement, alternative energy development, energy structure adjustment and international oil company development strategy, change from time to time, and seize development opportunities. .

(2) Expanding opening up and continuing to promote market-oriented reforms in key links
The opening of the oil and gas market is the trend of the global trend, namely, marketization of prices, liberalization of imports and exports, liberalization of wholesale and retail markets, diversification of market investment entities, and the coexistence of various economic components and business models. In the context of loose supply and demand in the oil and gas market at home and abroad, the symbolic significance of upstream opening in the short term is greater than the actual significance. Relevant policies for open bidding, circulation, and exit of oil and gas blocks still need to be improved. Further reducing the regulation of the import and export of crude oil and refined oil, and realizing free trade as soon as possible should be the focus and direction of deepening reform. The liberalization of import and export can not only increase the supply of resources in the domestic market, but also increase new sales channels for domestic enterprises and improve the international operation level of oil and gas enterprises.

(3) Transforming functions and further reducing administrative intervention
In response to the shortcomings of the Opinions in reducing government administrative interventions, the next step is for government departments to change their mindsets, break the mindset, clarify the responsibilities of the regulatory authorities, change the regulatory concepts and supervision methods, and manage the management. The tube is released. The government's supervision focuses on the control of quantity and price, the establishment of quality standards, the maintenance of market order, and efforts to form a market structure of “diversified competitors, diversified product sources, and standardized industry management” to guide the healthy development of the oil and gas market from a higher level.

(4) Cooperative competition to achieve coordinated development of state-owned enterprises and private enterprises
The reform of state-owned oil and gas enterprises and the reform of oil and gas systems have both coincidences and differences. The mature oil and gas market development experience and the development practice of the oil and gas industry since China's reform and opening up have proved the important role of fair competition mechanism for the healthy development of the market. A fair and open oil and gas market will provide more opportunities for oil and gas companies to develop. In the next step, according to the requirements of the "Opinions" and "Implementation Plan for the Reform of the Central Enterprise Company System", the policy boundaries of the industry and enterprises should be reasonably defined, and the state-owned oil and gas enterprises should be decentralized to solve the internal mechanism problems independently; further liberalization of access and reduction of control, Let more social capital enter the oil and gas industry, so that private enterprises and state-owned enterprises can cooperate and compete in a fair market environment. Mixed ownership is only one form of cooperation between state-owned enterprises and private enterprises. For both parties, opportunity fairness is more important than benefit sharing.

(5) Moderate inclination to promote the accelerated development of the natural gas industry
In the Opinions, the important position and development potential of natural gas are not fully reflected. China is an important force driving the growth of international natural gas consumption. Natural gas is of great significance to the transformation of global and domestic energy structures. In the next step, we should actively create conditions to cultivate mature natural gas production and consumption markets and continue to increase the proportion of natural gas in the energy structure. In terms of institutional mechanisms, obstacles in natural gas production, storage, transportation, consumption, and legal and regulatory aspects should be eliminated as soon as possible, especially in terms of gas source, storage, pricing, etc., to promote industrial chain health upgrades. To make natural gas play a more important role in promoting the energy production and consumption revolution.
(The author is Assistant to the Dean of China Oceanwide Research Institute, Ph.D. in Economics)

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