Comparative study of physical trading hub and virtual trading point

With the orderly advancement of China’s natural gas market-oriented reform, the construction of natural gas trading hubs is urgently needed.The authors conduct comparative analysis and research on two kinds of natural gas trading hubs widely used abroad-physical trading hub and virtual trading point, including:pipeline network facilities of these two types of trading hub have different physical structure, operation, supervision, pricing mechanism and investment method; natural gas trading market based on these two types of trading hub have different operating mechanism and efficiency.Therefore, the author proposed the recommendations for selection and construction of China’s natural gas trading hub:intersection or a section of pipeline on trans-provincial natural gas pipeline can be used to construct physical trading hub; provincial natural gas pipeline network is suitable for development into virtual trading point; each trading hub through the balance between supply and demand to form a hub price, while national gas market integration is realized through arbitrage-free equilibrium between trading hubs; trading hub achieve survival of the fittest by means of competition, and those with more participant, larger transaction volume, higher liquidity, and better transparency have gradually matured and developed into benchmark trading hub.