Gas regulator wants to extend remit to LNG terminals

Vol 11, PW 13 (01 Nov 07) People & Policy

Petronet-LNG and Shell should brace themselves for likely regulatory control of the Dahej and Hazira LNG terminals by the downstream petroleum and natural gas regulator.

Under the Petroleum and Natural Gas Regulatory Board Act, 2006, the regulator’s power is – for now - restricted to common carrier pipelines and city gas distribution networks only. But regulator Labanyendu Mansingh wants to change that.

Speaking to PETROWATCH, Mansingh talks of the Act’s “limitationsâ€‌ and suggests extending its remit to bring other “critical petroleum and natural gas infrastructureâ€‌ such as LNG terminals, tank storage and airport refuelling facilities under his supervision. “We are studying this issue,â€‌ Mansingh tells us.

“But currently there is no legal basis for the regulatory board to oversee these facilities.â€‌ Mansingh’s prime concern is for â€کopen access’ to ensure that a “fair and competitive marketâ€‌ emerges for the eventual benefit of consumers.

“Internationally, there is â€کopen access’ to all these facilities.â€‌ A LNG terminal, says Mansingh, is only a specialised port.

“All LNG tankers should have access to the terminal if there is capacity,â€‌ he says. “You can’t deny entry to a tanker if there is spare capacity.

â€‌ In India, says Mansingh, the owners of the Dahej and Hazira LNG terminals (Petronet-LNG and Shell-Total) both claim they are fully booked. Since there’s no way of verifying these claims, he adds, “nobody else can bring in a (LNG) cargo and there’s no legal remedy available under the (regulatory board) Act.

â€‌ Mansingh believes companies unable to afford the colossal expenditure needed to build a LNG terminal should be allowed access to existing infrastructure. “If you need gas how will you import it if there’s no â€کopen access’ to LNG terminalsâ€‌ asks Mansingh.

“In many countries â€کopen access’ is a precondition to get authorisation.â€‌ Some time in the future, argues Mansingh, legal remedies must be made available under the Act.

“Many such issues will come up and eventually the Act will have to be amended,â€‌ he adds. Ultimately, it’s the government that will decide.

“We can only give recommendations to the ministry,â€‌ admits Mansingh. “It is up to them to accept or reject.