Business

Monday March 26, 2007

Energy trading market planned to protect suppliers

BY YIN PING



THE Yangtze River Delta is preparing to inaugurate a united energy trading market in an effort to safeguard its energy supply and enhance efficiency.

The plan was discussed at the end of last year by authorities from Shanghai, Jiangsu and Zhejiang, three major forces in the delta, as part of a collaboration scheme among the three regions.

Xia Xiaolin, energy chief from the Zhejiang Reform and Development Commission, said at the meeting that a united energy platform would lower costs and distribution barriers in the delta and forge a trading centre for coal, oil products and power.

It will also promote collaboration between energy companies, and establish more intermediary and energy-saving service companies, Xia says.

Beyond that, he adds, the delta will try to build a world-class energy supply and collaboration mechanism.

The energy platform will be established by four teams responsible for energy integration, energy saving, power development and fossil fuel security.

The reform and development commissions of Zhejiang, Shanghai and Jiangsu, as well as East China Grid Co Ltd, will lead the effort. The teams were scheduled to finish planning by the end of 2006, but thus far, no formal plans have been announced.

But the delta has already made two moves towards energy collaboration – bidding on electricity supplied to the delta’s grid and reopening of the Shanghai Petroleum Exchange.

In April last year, East China began to require power plants to bid each day for a licence to integrate their power into the region’s grid, making distribution more efficient.

The Shanghai Petroleum Exchange, reopened last August, is now a spot-trading market for fuel oil and will include other oil products in the future.

With the region’s large energy consumption and equally large energy shortage, planners say more collaboration is necessary.

The Yangtze River Delta, the most developed region in China, contributes 20% to the nation’s gross domestic product and is responsible for one-third of its imports and exports, but little of its 15% portion of national energy consumption comes from its own resources.

A united energy platform sounds good, but only when the market is the major force, insiders say.

  • E-mail this story
  • Print this story