Gas industry Polices and Regulation - PowerPoint PPT Presentation

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Gas industry Polices and Regulation

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Title: Gas industry Polices and Regulation


1
Gas industry policy and Regulation
2
Policy and regulation
3
Gas Policy
  • Gas policy can be evaluated according to goals
    and criteria. The achievement of each goal is
    assessed according to the dynamics of the gas
    market. In fashioning a policy framework for the
    Gas Industry, it is vital to avoid several
    mistakes that will lead to a condition where the
    market is constrained by either supply or demand.
  • Lack of development results in markets that are
    supply constrained. This occurs when either gas
    prices or after-tax profits do not justify
    investment in exploration. In a supply
    constrained market, prices do not reflect the
    actual cost of gas production. Low market prices
    or price subsidies reduce the incentive for
    investment, discourage conservation and encourage
    inefficient production practices. 
  • Demand constrained markets are primarily the
    product of price shocks where gas costs exceed
    those of alternative fuels. In this situation,
    competing fuels capture the market. Fuel
    switching depresses gas development. As a result,
    TOP balances increase as Buyers are unable to
    utilize gas economically. Under-utilized
    infrastructure results in excess capacity. If the
    government has provided credit support for gas
    purchasers, there is a burden on the treasury.

4
Policy goals
5
Policy goals ctn
6
Regulation
  • Policy is implemented through regulatory
    instruments that include guidelines, licenses,
    rules, codes of conduct and contracts. The extent
    to which the government determines that
    regulations are needed to establish the chosen
    policy framework for the Gas Industry depends
    upon the authority delegated from the central
    government (executive or legislative) to the
    executing agency. The regulatory framework ranges
    from interventionist to light-handedness
  • State ownership and prescriptive regulations
    exemplify interventionist policies. A
    light-handed approach is implemented through
    performance standards, self- regulation or
    reliance on market forces.

7
Function of Regulation
8
Upstream policy and regulation
  • For hydrocarbon endowed nations, upstream policy
    and regulations are focused on resource
    development. Depending on the state of both the
    resource and the nations social, economic, and
    political orientation.
  • A nations policy informs the nature of upstream
    industry structure and fiscal regimes.
    Governments have selected one of two types of
    licensing system which are concessionary or
    contractual systems.
  • The principle of the concessionary license system
    is that the state transfers its ownership of
    resources in the subsurface to a commercial
    entity. The entity obtains exclusive rights to
    extract crude oil and natural gas in a defined
    area for a limited time. 

9
Upstream policy and regulation
  • Under contractual systems, the state retains its
    ownership of hydrocarbon resources. A commercial
    entity, the contractor company, is being engaged
    to extract petroleum according to some contract.
    The countries using this type of system often
    have their state-owned oil company to represent
    the interests of the state. 
  • Most used variants of contract
  • Production sharing contracts 
  • Service contracts 
  • Buyback contracts 
  • Technical assistance contracts 

10
Upstream policy and regulation
11
Midstream and Downstream
12
Midstream and Downstream regulation tools
13
Midstream and Downstream regulation tools
14
Policy and regulation in project participation
  • Participation in commercial enterprises is a
    well-established means of government intervention
    in the Gas Industry. There are different forms of
    participation depending upon the segment of the
    Gas Industry that is under consideration.

15
Upstream government participation
16
Mid Downstream government participation
17
Participation through financing and credit support
18
Participation through financing and credit support
19
Taxation
20
Competition
21
Policies on intergovernmental relations
22
Group discussion
  • Local content
  • Influence of global policies
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