Gas industry Polices and Regulation

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Gas industry policy and Regulation
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Policy and regulation
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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.

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Policy goals
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Policy goals ctn
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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.

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Function of Regulation
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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. 

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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 

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Upstream policy and regulation
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Midstream and Downstream
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Midstream and Downstream regulation tools
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Midstream and Downstream regulation tools
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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.

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Upstream government participation
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Mid Downstream government participation
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Participation through financing and credit support
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Participation through financing and credit support
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Taxation
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Competition
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Policies on intergovernmental relations
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Group discussion

• Local content
• Influence of global policies