Title: Gas industry Polices and Regulation
1Gas industry policy and Regulation
2Policy and regulation
3Gas 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.
4Policy goals
5Policy goals ctn
6Regulation
- 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.
7Function of Regulation
8Upstream 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.
9Upstream 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
10Upstream policy and regulation
11Midstream and Downstream
12Midstream and Downstream regulation tools
13Midstream and Downstream regulation tools
14Policy 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.
15Upstream government participation
16Mid Downstream government participation
17Participation through financing and credit support
18Participation through financing and credit support
19Taxation
20Competition
21Policies on intergovernmental relations
22Group discussion
- Local content
- Influence of global policies