Shanghai Petroleum and Natural Gas Exchange Runs Officially

On November 26, Shanghai Petroleum and Natural Gas Exchange (SHPGX) opened officially, marking further progress in the marketization of China’s energies. Since its trial operation in July 2015, the trading center has played a big role in linking up suppliers and buyers, and in forming reasonable market prices for energies.
With transaction size expanding gradually, SHPGX’s unilateral trading volume for 2016 is estimated to have exceeded 15 billion cubic meters, accounting for around 8% of China’s total natural gas consumption.
China’s energy consumption pattern is changing profoundly. As a kind of clean and efficient energy, natural gas has made up increasingly high proportion in the nation’s primary energy mix, becoming an emerging industry in China. As a market-oriented, open and transparent platform, the trading center is to accelerate the reform of natural gas prices, make prices more real and boost more reasonable allocation of resources, according to industry experts.
Featuring fairness and openness, the SHPGX could reflect regional and seasonal characteristics of domestic natural gas consumption, and will help industry players find real market value of natural gas, said CNPC chairman Wang Yilin. Furthermore, it is to solve contradictions between supply and demand, and stabilize market supply by means of marketization. CNPC intends to raise trading volume of natural gas gradually, and will fully support the center in launching natural gas futures business as soon as possible.
During trial operation of the center, 2.03 billion cubic meters of natural gas from CNOOC were traded, said CNOOC chairman Yang Hua. And from January 1 to October 31, 2016 the trading volume has reached 2.44 billion cubic meters.
The SHPGX is a bridge between suppliers and buyers.It aims to construct a spot trading market for petroleum and natural gas, with the market to determine pricing. This is exactly a target China sets in its energy marketization reform, said industry experts.
The trading center has released a number of price indices, like LNG PPI (liquefied natural gas, producer price index), LNG transaction price index in southern China, WPI (wholesale price index) for China’s gasoline and diesel, etc. The number of register members has reached nearly 300.