Analysis of the dynamics of development and competitiveness of the Chinese gas industry

Bai Izhan' Postgraduate student, Department, Faculty of Public Administration, Federal State Budgetary Educational Institution of Higher Education "Lomonosov Moscow State University" 119991, Russia, Moskovskaya oblast', g. Moscow, Lomonosovskii prospekt, 27, korpus 4 fastyiran.@gmail.com

Fastovich Vladimir Vladimirovich Master's Degree, Department, Faculty of Public Administration, Federal State Budgetary Educational Institution of Higher Education "Lomonosov Moscow State University" 119991, Russia, g. Moscow, Lomonosovskii prospekt, 27, korpus 4 yanfengkang@gmail.com

Introduction

The development of the gas industry is one of the most important sectors among many sectors of the economy. The relevance of this work lies in the fact that natural gas plays an important and specific role in various branches of material production not only in China, but also the partner countries, which have signed contracts. The development of technology, the growth of demand for gas and a General increase in energy prices inevitably lead to the creation of a global gas market. Chinese gas industry can be divided into three segments: production, transportation and sale. The corresponding price of natural gas is divided into four parts: the Franco-factory price, fee for transportation by pipeline, the fee for the distribution of gas and the price for the end user.

The research object of this article is the natural gas industry in China, special attention is paid a competitive force.

The subject of research is the factors of the dynamics of exports and imports of gas (which are also reflected in the composition of the gas industry of China).

The problem can be formulated as the complexity of the assessment of the dynamics of the industry without identifying what are the key driving and restraining forces in the gas industry of China.

Accordingly, the aim of this work was to analyze the influence of various factors affecting the growth and development of the gas industry, in particular, the interests of buyers, the dynamics of production, a trend towards the use of clean energy, etc. and to identify the most significant. It is necessary to solve the following tasks: analysis of imports and exports of gas over the last decade, the structure of energy consumption in China and the threat from alternative fuel sources, and to evaluate the competitive forces operating in the gas industry of China on the model of M. porter

This theme was developed by many domestic and foreign scientists. Primary sources are the writings of economist M. porter. Among Chinese researchers select Whether Lingling, who formulated the point of view of wisdom on the analysis of the status and prospects of the gas industry at the present stage, and Zhao is an easy, offered 7 tips to help you achieve business value on natural gas. Among foreign authors in this study are of greatest interest of work in terms of competitiveness and strategic management: A. K. Alexandrov, D. directory and T. A. Gileva.

The scientific novelty of this work is to identify the main driving forces in the current conditions, as well as insights about the main challenges in this direction on the basis of which the further stages of the study will be discussed in more detail measures identified in the study areas.

Overview of the Chinese gas industry.

Due to the fact that the gas industry of China will not be able to meet the rapidly growing demand for gas production from its own resources (tab.1), the gas industry of China depends on imports of hydrocarbons. Source of natural gas in this case can be as traditional resources of land and sea fields and unconventional resources, such as deepwater fields, shallow deposits under the bottom of the ocean, methane hydrates, shale gas, coal bed methane, etc. ^[13]

After the separation of ethane and higher fractions of hydrocarbons from methane, he will be transported either in the form of LNG tankers-metanopoli or through pipelines.

World primary energy consumption fell by 4.5% in 2020, the biggest decline since 1945. However, the share of natural gas continued to grow 24.7%. While the supply and demand of energy worldwide to weaken, the annual growth rate in natural gas consumption in China in 2020 will amount to 6.9%, which will amount to 8.6% of world consumption of natural gas. Over the last decade, natural gas consumption in China increased from 108.9 billion cubic meters in 2010 to 330.6 billion cubic meters in 2020 (Fig.1). In 2020, the volume of imports of natural gas will reach 139.1 billion cubic meters, and the external dependence reached 41.5% ^{[1, p. 42]}. This reflects the growing China's dependence on foreign natural gas and China's dependence on imported hydrocarbons (tab.1).

Natural gas imports in China is as marine liquefied natural gas (LNG), and land (pipeline gas) routes. Participants of the market of gas industry of China are mainly three public companies: China national petroleum Corporation (CNPC), China petroleum and chemical Corporation (Sinopec) and China national offshore oil Corporation (CNOOC).

Table 1. Mining and gas imports in China over the past 10 years. (units of 1 billion cubic meters) ^[1]

Figure 1. Top 10 largest consumers of natural gas in the world in 2020 (units bcm) ^{[1, p. 38]}

Why the rivalry of some countries win and others lose? Of the issues related to the economy, perhaps this sounds in our time especially often. Competitiveness – this is what primarily concerned about the government and industry of any country ^{[18, c. 30]}. The adaptation of enterprises to competitive unstable and volatile external environment should be done in a comprehensive and continuous analysis of competitors ' activities, a private strategic potential and assessment of the effectiveness of its use, as well as determining the position of the enterprise in the market of goods and services relative to competitors, i.e. assessment of competitiveness of the enterprise ^[4].

In the current economic situation, the heads of enterprises and organizations of various forms of ownership need to be wise, cautious policy of development of their companies. This is especially true for the gas industry. The status of the company depends on how successfully it is able to react on different outside influences. Analyzing the external situation, it is necessary to highlight the most significant for a specific period of time factors. An interrelated consideration of these factors with the company's possibilities allows to solve problems. To determine the position of the enterprise in the market it is necessary to analyze the structure of competition, depending on the industry in which the company operates. This can be done on the basis proposed by M. porter's model of competition analysis ^[15].

Economist M. porter suggested that the nature of competition and its driving forces. The competition involves not only the market players, consumers, suppliers, potential players and substitute products are all competitors, in varying degrees, affect the development of the industry ^[19].

The result of the researches of M. porter was the concept of the five forces of competition. According to this concept, the state of competition in a given market can be characterized by the interaction of the five competitive forces (Fig.2):

l the threat of invasion of new competitors;

l the threat of substitutes;

l economic potential suppliers;

l economic potential buyers;

l the rivalry among the existing competitors ^[20].

Figure 2. An assessment of the competitive forces operating in the gas industry of China on the model of M. porter

Analiz threat of new entrants.

The gas industry is a special industry, which is associated with the strategic security of the country. The Chinese government has strict rules in this industry. Without the approval of the government, other businesses and individuals not permitted to enter the industry. Beginner restricted funds and technology.

Therefore, threat of new entrants in China is low. However, large foreign energy and oil companies are differently involved in the gas industry of China, in connection with the globalization process ^[23].

These foreign oil companies are unlikely to compete with the three major Chinese oil companies in the upstream sector. Competition can be concentrated only in processing plants, especially in the consumption of refined oil.

Threat analysis of the emergence of substitutes.

Existing alternatives are:

Coal, nuclear energy, hydropower, solar energy, etc. With the current technological point of view, renewable energy accounts for only 14% of the total energy demand in China in 2020, and may not be the main source of energy for an extended period of time ^[17]. In 2020, coal is the main energy source in China, which accounted for 57% of the consumption of energy [Fig.3]. However, the consumption of coal has led to a massive environmental pollution of China. As China attaches great importance to environmental protection, the use of oil and natural gas in the energy sector largely encouraged and supported. The General trend of energy consumption in China is that the share of coal gradually decreases and the share of consumption of oil and natural gas is increasing ^[2].

Figure 3. Structure of consumption by type of energy sources in China by 2020. (in %) ^[3]

Analiz market power of suppliers.

In terms of volatility of market suppliers play a crucial role in the development of the gas industry in China.In 2020, natural gas imports in China will come from a variety of sources. 24 is an exporter of LNG and Australia is the most important exporter, which accounts for 43%, followed by Qatar, Malaysia, Indonesia, Russia and the United States. The above six countries account for 85% of all imports [Fig.4]. Exporters of natural gas by pipeline is basically the country's border with China on land, of which the share of Turkmenistan accounts for 60%, followed by Kazakhstan, Myanmar, Russia and Uzbekistan ^[21].

Figure 4. The sources of the main importing countries on China's natural gas market in 2020

The market power of consumers.

Early Chinese, the price of gas has not been fully liberalized and trading at an estimated price of government, but the price has been changed due to changes in international oil prices. Thus, the effect of purchasing power is limited.

In China's consumption in 2021, the share of Eastern China and Northern China exceeded 20%. Among them, Sichuan, Chongqing, Shaanxi, Xinjiang and other large provincial natural gas producers constitute a relatively high proportion of natural gas consumption; the Top 3 in gas consumption in the provinces, municipalities of China in 2020 (tab. 2): Guangdong province (9.8%), Jiangsu (8.4%), Sichuan province (7.2%).

Table 2. Gas consumption in the provinces and municipalities of China in 2021 (billion cubic meters) ^[24]

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