China’s zonal gas transmission tariff: changes and implications

On 5 December 2023, China’s National Development and Reform Commission (NDRC) released new tariffs for inter-provincial natural gas transmission pipelines that PipeChina operates. The new rules simplify the number of tariffs from 15 previously to 4. The changes in tariffs differ significantly based on pipelines and zones. The Northwest, Northeast and Southwest zones have seen reductions, while the Central and East zones may have a slightly higher average tariff. Under the new tariffs, transmission costs for pipeline imports from Central Asia and Russia will increase, potentially benefitting LNG imports in coastal regions. The revised tariffs will improve market dynamics. With a uniform zonal tariff, wholesalers and buyers may focus on supply and route optimisation, which will likely allow PipeChina to build more connecting pipelines and force upstream players to reduce costs.