The first national-level energy trading center in China, the Shanghai Petroleum and National Gas Exchange (SHPGX), officially began operation on Saturday, an important step in the country's energy market reform and a way to extend its influence on global commodity pricing, analysts said.
The trading center is a platform for spot trading of natural gas, crude oil, liquefied petroleum gas, refined oil and other energy products, the Xinhua News Agency reported on Sunday. Member dealers can trade either at posted prices or through bidding. The platform has 269 member dealers, domestic news portal ifeng.com reported on Sunday.
The center will regularly publish multiple trading price indexes for those energy products, serving as references for the industry.
It is estimated that natural gas transactions via the platform will exceed 15 billion cubic meters this year, representing 8 percent of China's total gas consumption, Xu Shaoshi, the chairman of the National Development and Reform Commission (NDRC), the country's top economic planner, was quoted as saying in a statement on the website of the NDRC on Saturday.
The SHPGX is expected to "connect suppliers with buyers, make market transactions more efficient and provide an open and transparent pricing mechanism," Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, told the Global Times on Sunday. "In the past, there was information asymmetry between buyers and sellers, but the platform will end that."
The center's opening comes as the government is pursuing market-oriented price reforms in the energy sector to raise the industry's competitiveness, Lin noted. "The price of natural gas used to be set uniformly by the NDRC, but Chinese authorities have been stepping up efforts to introduce market players, and the SHPGX is an example."
The SHPGX will develop into an Asia-Pacific oil and gas pricing and center, the NDRC's statement said.
The platform was established in the China (Shanghai) Pilot Free Trade Zone in March 2015 with registered capital of 1 billion yuan ($144 million), the statement noted.
It started trial operations in July 2015, and it has 10 shareholders, including the three major State-owned oil giants: Petro China, Sinopec Co and China National Offshore Oil Corp.