APEC Gas Market Structures

Institute a more competitive bidding process for new production sharing contracts and set efficiency targets for existing production sharing contracts.

Split the monopoly firm into competing firms or divisions and let private firms produce gas on their own.

Allow competing firms to develop new gas fields and produce gas in fields that have already been opened.

Give competitors non-discriminatory access to new gas pipelines and capacity on existing pipelines that is not used by incumbent producers.

Strengthen requirements for competitive access to gas transportation services.

Separate transmission and production functions so that the dominant firm no longer has an incentive to discriminate in favour of its own gas production.

Increase the flexibility of buyers to respond to opportunities for importing gas at competitive prices.

Reduce reliance on long-term contracts, reduced take or pay amounts, and use of the spot market.

Encourage more aggressive price negotiation and lower costs of gas transportation by opening up LNG facilities and pipelines to competitors and allowing customers to choose their gas suppliers.

Expand the range of customers that are allowed to choose their gas suppliers.

Encourage customers to switch suppliers by simplifying the process to do so, providing reliable information on competitors’ terms and rates, and ensuring that fall-back rates with the traditional utility allow a margin for price competition.