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The Reconstruction of UK Natural Gas Market: Process and Enlightenments(No. 6, 2017)


By Deng Yusong, Institute of Market Economy, DRC

Research Report No. 6, 2017 (Total 5081) 2017-1-13

Abstract: In May 1949, the gas industry in the United Kingdom was nationalized, indicating the formation of a market structure that state-owned enterprises monopolized the downstream supply. After Mrs. Thatcher assumed office, the government began to promote privatization reform to solve the problems in economic development. It privatized the state-owned British Gas Company (BG Group) in 1986, established the independent regulatory agencies and eased the market access for large consumers. Since then, with the support of the regulatory agencies, the UK gradually broke BG's monopoly, separated the pipeline business from supply business, and cultivated a competitive market mode relating to natural gas supply links and sales in 1998, and became the first European country that reconstructed the integration of supply and transportation of natural gas markets in respond to market competition. The reconstruction process of UK natural gas market shows that its experience makes good reference to China in terms of the separation of pipeline business from supply business, the establishment of independent regulatory agencies and the implementation of the competition-oriented supervision as well as the promotion of natural gas market reconstruction in line with legal regulations.

Key words: natural gas market, reconstruction, the United Kingdom