1. Franchising system

 

The franchise system originated from the "Administrative Measures for the Franchising of Municipal Public Utilities" (formerly Order No. 126 of the Ministry of Construction, effective from May 1, 2004). After that, the "Infrastructure and Public Utilities Franchising Measures" was released on June 1, 2015. It will be implemented on the same day.

 

　　As franchising directly involves the survival of natural gas companies, all companies attach great importance to this issue. In recent years, there have been endless cases surrounding franchising. Some of these cases involved local governments and natural gas companies, some involved natural gas companies in different regions, and some involved pipeline gas companies and LNG trading companies. These disputes are also mixed with thinking about the franchise system, such as the similarities and differences between franchising and gas business licenses, whether the scope of franchising is limited to the natural gas pipeline network, whether gas filling stations belong to the scope of franchising, and franchising rights. How to assess the price, and how can the franchisee provide relief in the event of government default?

 

　　 2. Take or pay contract

 

　　 "take or pay" contract refers to an agreement in which the buyer must pay a certain amount even if the seller does not provide products or services. It originated from the sale of natural gas and has now become a major form of contract for international and domestic bulk energy sales. The buyer's unconditional and irrevocable payment obligation is the core of the take-or-pay contract. Its characteristics are mainly reflected in the take-or-pay clause specifically stipulated in the contract. Specifically, it is long-term, has price restrictions and quantity restrictions, and the buyer’s payment obligation The characteristics of unconditional and irrevocable nature, the seller’s obligation to pay without error and the buyer’s obligation to pay without negligence, relatively strict contract terms, and the user must provide credit guarantees.

 

　　 Pay as you go contract terms have a certain degree of professionalism, and have considerable requirements on the operational capabilities of suppliers and buyers. A good take-or-pay contract must have an accurate description of the daily contract volume, take-or-pay volume and k value, supplemental gas volume and over-gas volume, etc. At present, the take-or-pay clause basically starts from the upstream gas source, connects the midstream pipeline network, extends to city gas, and even end industrial users, and runs through the entire industrial chain of the natural gas industry.

 

　　3. Conviction for stealing gas measurement

 

　　 In the past ten years or so, the theft of natural gas has occurred from time to time in various regions of the country, even to a fairly rampant level. A small number of lawbreakers who have mastered some natural gas technology have wantonly instigated and taught criminal methods to assist in the theft. From a legal perspective, the theft of natural gas is a crime of theft, which can be investigated with criminal responsibility.

 

　　 But in practice, the physical form of natural gas is "ephemeral", that is, it is invisible, intangible and objective. Therefore, in handling related cases, how to accurately calculate the amount of natural gas stolen is of great importance; theft is a crime, and the amount of theft is an important criterion for judging whether a criminal suspect constitutes a crime and a serious crime.

 

For many years, how to calculate the specific amount of natural gas theft objectively, fairly and reasonably? In judicial practice, because of the lack of corresponding scientific and practical calculation methods, it has plagued the natural gas industry's crackdown on natural gas theft for a long period of time and interfered with it. Judicial authorities have imposed penalties and challenged the authority of the law. In recent years, some natural gas companies have begun to slowly explore a way to scientifically measure the amount of gas stolen and obtain confirmation from the judicial authorities.

 

　　 4. Anti-monopoly issues

 

　　 In recent years, antitrust has become a hot topic. In terms of legislation, law enforcement, and judicial practice, China’s anti-monopoly has issued strong signals to increase anti-monopoly law enforcement, maintain a fair competitive market environment, and protect consumer rights.

 

　　 As the upstream three barrels of oil monopolize China's natural gas source, the midstream long-distance pipeline network, and the downstream city gas are traditional public utilities. The natural gas industry is inevitably affected by the anti-monopoly wave. In the face of increasingly mature consumers, how to meet the challenge of antitrust has become a topic that the natural gas industry must face together. In foreign countries, the Korean Gas Group’s monopoly has directly promoted the construction of LNG trading hubs; in China, Chongqing Gas, a listed company, requires users to accept the actual settlement of gas consumption through a standard contract, which is calculated based on the user’s actual gas consumption multiplied by the correction coefficient. Determined as additional unreasonable trading conditions, the regulatory authority imposed a fine of 1.79 million.

 

　　 In addition, the mixed ownership reform of PetroChina and Sinopec, the sale of equity in the West-East Gas Pipeline Network Company, and the fair opening of the oil and gas pipeline network are inevitably closely related to antitrust laws. It can be said that anti-monopoly issues will always accompany the entire reform process of China's natural gas industry.

 

　　 5. Special equipment supervision

 

The natural gas industry involves many special equipment, such as boilers, pressure vessels (including gas cylinders), pressure pipelines, etc. For these special equipment, the state has a series of regulatory regulations, such as the "Special Equipment Safety Law" and "Special Equipment Safety Supervision Regulations, Special Equipment Quality Supervision and Safety Supervision Regulations, Special Equipment Registration and Use Management Rules, Special Equipment Operators Supervision and Management Measures, etc., have formed a complex system of special equipment laws and regulations.

 

With the large-scale use of CNG and LNG in transportation energy and the rapid development of the LNG industry, the special equipment involved in the natural gas industry has expanded from pressure pipelines to pressure vessels. In this field, illegal phenomena are emerging one after another, and some have received administrative penalties for violations. , There are also legal liabilities for causing accidents.

 

　　 6. Pipeline property rights and initial installation fee

 

　　In the process of natural gas company mergers and acquisitions or in the process of natural gas companies expanding customers, and even in the process of litigation and arbitration, such issues are often involved:

 

　　 1. The natural gas pipelines and facilities in the red line of the residential area building plan are owned by the natural gas company or owned by the owner? If they are owned by the owner, is there a corresponding legal basis?

 

　　2. Who owns the property rights of the natural gas pipelines invested by non-resident users? In fact, the division of these property rights is not difficult. What is really difficult is the operation and maintenance responsibilities corresponding to the property rights and subsequent maintenance investment.

 

　　 In addition, gas initial installation fees have always been a hot spot of social concern. With the cancellation of initial installation fees in some areas, the cancellation of initial installation fees, different standards, and use supervision in most areas in China have become the focus of attention. Natural gas companies believe that under the current situation of insufficient construction of pipeline natural gas facilities in China, the initial installation fee is not only the user's share of the cost of urban natural gas infrastructure construction, but also plays a role of "replenishing gas with fees". Before rationalizing the natural gas price system, the initial gas installation fee should not be rushed.

 

　　 However, the government has proposed that the abolition of the initial gas installation fee is the general trend of the reform of the price policy of public products and public welfare services. In fact, this problem is in the final analysis the status of the main investment in the pipeline network construction. However, since the initial intention of the designer of the initial installation fee is only to solve the shortage of construction funds, rather than as a component of the gas price, the amount of the cost has not been fully demonstrated, and it is relatively arbitrary. Therefore, the initial installation in recent years Fei Cai is highly controversial.

 

　　 Seven, natural gas metering

 

　　In domestic natural gas trade and consumption measurement, whether it is in gaseous or liquid form, it is generally measured by volume or mass (weight). However, for example, in the gaseous state, due to the influence of various factors such as pressure (pipeline operating pressure and atmospheric pressure), temperature, flow rate, etc., measurement deviations will be caused, so that correction devices such as temperature and pressure have to be installed to make the measurement value close to the "accurate value". In fact, in the current international trade, natural gas energy measurement is a popular measurement method for natural gas trade and consumption. From the perspective of future trends, energy metering will gradually become popular. For this reason, our contract text should be adjusted accordingly.

 

　　 In addition, due to historical reasons, the ownership of measuring instruments between natural gas companies and users has always been disputed. There are also various practices in various regions, which need to be unified and clarified.

 

　　 8. Price mechanism

 

China’s natural gas industry is an industry subject to strict price control. Its price system involves specific laws related to: long-term contract price mechanism and interruptible contract terms (that is, through the stimulation of natural gas prices for interruptible users, During the peak period, the natural gas load shall be interrupted or reduced according to the requirements of the interruptible contract), the peak-valley gas price system, the upstream and downstream price linkage clauses, the natural gas fiscal and tax support policy, and the residential user price adjustment hearing system.

 

　　 From the perspective of countries with relatively developed natural gas industries in the world, their natural gas price reforms are implemented in the form of promulgating laws and decrees, rather than relying on administrative orders. my country is constantly improving the corresponding natural gas price regulation system, so that natural gas pricing and price supervision can be followed by law.

 

　　 Nine. Pipeline engineering contract

 

　　 The main energy infrastructure of the natural gas industry is laying pipelines. The positioning of the natural gas company has always been a focus in the pipeline engineering contract entrusted by the user. If a natural gas company intervenes in a pipeline contract, it is actually positioned as a general contractor. Since it generally does not directly lay pipelines, its external subcontracting levels are too many and it is very easy to become an illegal subcontracting.

 

　　 If the natural gas company does not intervene in the piping contract, and the user directly negotiates with the design and construction company, the natural gas company will lose a large part of the source of profit, and the quality of the pipeline project cannot be controlled, and the responsibility for future natural gas leakage accidents cannot be defined.

 

　　 10. Transaction M&A Projects

 

With the rapid advancement of market-oriented reforms featuring relaxed access and licensing rights in the natural gas industry, two important changes have occurred in the natural gas industry, especially in the downstream: one is that the government issued business qualification certificates to enterprises and was replaced by a franchise system; Bundled operation of distribution systems and sales companies began to separate and operate independently. As a result, mergers and acquisitions in the natural gas industry have been surging in recent years.

 

Natural gas transaction mergers and acquisitions generally have two methods: asset mergers and equity mergers. If asset acquisitions are adopted, some characteristics of the natural gas industry should be paid attention to in terms of assets. One is that there are disputes about the definition of pipeline property rights, and the other is the assessment of pipeline assets. Difficulties (difficult to dig and verify); if you adopt the method of equity acquisition, you need to focus on: first, the historical installation fee, planning gas, and deposit issues need to be resolved; the second is the franchise issue, including the main body, the beginning and the end Time, business scope, and business area, etc.; third, many gas companies were originally transformed from public institutions, which would bring up many asset and human issues.

 

In addition to these legal issues in the natural gas industry, the natural gas industry also has some common legal problems, such as disputes over arrears of gas payments, compensation for personal damages, energy project infrastructure, natural gas supply contract disputes, etc., but these problems are basically the same as those encountered by other industries. The legal issues are similar, so I won’t repeat them here.