Simply put, the production environment is like a seller. When domestic oil producers produce oil and want to sell it, they need a system or a set of mechanisms formed by a market to determine the price. But this involves what kind of currency to price, what standard to price, how to adjust the price (price reduction and price increase), and the unit of measurement and so on. However, the seller has an active factor or obvious advantage in these factors, and with the help of strong military backing and certain geopolitical advantages, it has gradually evolved into an oil financial market.
Take natural gas as an example—
The formation factors of natural gas price are complex, and the pricing mechanism of natural gas is unreasonable. The relevant price and market-driven policies for shale gas development and utilization have not been introduced, which has become a key issue restricting shale gas exploration and development. At present, the pricing power of natural gas is still controversial, and it is still inconclusive which currency will eventually become the main settlement currency of natural gas. With the increasing importance of natural gas, the competition of natural gas pricing power will be intensified. At present, there are four pricing systems for global natural gas trade: one is the pricing system with Henry Hub as the core in North America; Second, Britain's Virtual Balance Point (NBP) pricing mechanism; Third, the pricing system of LNG trade in Northeast Asia; Fourthly, the government negotiation pricing model of bilateral monopoly adopted by the former Soviet Union.
At present, the United States is in an obvious dominant position in the competition between pricing power and settlement currency. However, due to the obvious mutual restraint of various forces, neither side can win the final victory in a short time, which provides a time window for the rise of China in the natural gas market. On the one hand, China, as the world's largest consumer of commodities, consumes 40% of the world's metals, 20% of energy and 2 1% of agricultural products; On the other hand, China has the richest shale gas reserves in the world, and its exploitation prospect is broad. In other words, China occupies an important position in both the supply and demand sides of the international commodity market. China should make full use of this favorable condition, take advantage of the good opportunity of RMB internationalization, take various measures at the same time, enhance the right to speak on pricing in the international natural gas market, and participate in the redistribution of the international natural gas wealth map. We should improve the pricing mechanism of domestic unconventional natural gas prices as soon as possible, give full play to the basic role of market mechanism in allocating resources, encourage market competition and various economic sectors to enter the unconventional natural gas industry, and gradually develop and expand China's natural gas industry. Steadily promote the introduction of RMB-denominated natural gas futures contracts on the Shanghai Futures Exchange and the Hong Kong Commodity Exchange. Take advantage of the offshore RMB center in Hong Kong to develop RMB-denominated natural gas futures trading and enhance its appeal to international investors.