Shell's robust answer to plan for gas regulation

Vol 7, PW 17 (05 Nov 03) People & Policy

Shell has issued a strongly worded rebuttal of the government's draft gas pipeline policy.

For one, Shell is unhappy the oil ministry is offering private investors inadequate "space" in India's emerging gas market. "Shell believes regulation must be aimed at drawing private capital as well as public capital," writes Shell India director Marc den Hartog in a six-page letter sent in September.

"Regulation must aim to create space for private investors to develop and mature the market, in concert with public sector companies." Shell believes regulation is, "fundamental in maturing" an emerging gas market. "Appropriate regulatory management of the gas sector will draw investment capital, at terms that will benefit the customer.

Infrastructure stock can and will be rapidly built as multiple operators implement bankable projects across the gas value chain." By 2004, Shell will have committed Rs3, 000cr ($625m) to the Indian gas sector and believes it has earned the right to sit on any future 'National (gas) Advisory Council'. Adds Shell: "Private investors should be represented on the council" which should also represent, "a wider constituency of stakeholders, including civic and consumer groups." Important: "The council should be independent of government." Shell suggests several changes in the government's gas policy to reflect the emergence of LNG and to make it more market friendly.

For instance, the objective of regulation should be, "to provide an equitable and sustainable framework for future growth and investments in gas pipelines by private and public investors." Shell believes the draft policy inadequately defines crucial terms like: Common Carrier, Captive Pipelines, Third Parties and Level Playing Field and wants the gas pipeline policy to define what it means by 'Contract Carrier'. Writes Shell: "Contract carriage is a pipeline access regime in which capacity is initially contracted with third parties before the pipeline is laid." In such a system, "capacity rights of shippers are transferable" and, "regulatory oversight to ensure third party access is a norm."