Others don't allow â€کopen access' to LNG terminals

Vol 11, PW 13 (01 Nov 07) Midstream & Downstream

Multinational oil and gas companies with long and wide experience of the global LNG business believe India’s regulator Labanyendu Mansingh has been misled about â€کopen access’ to LNG terminals elsewhere in the world.

In brief, says a source with an oil and gas major, “No country in Asia has â€کopen access’ to LNG terminals; the USA introduced â€کopen access’ when it had four dormant, mothballed terminals.â€‌ But this policy was, “effectively reversed in the 1980s and since then all new LNG terminals are exempt from providing â€کopen access’.

â€‌ The European Union allows â€کopen access’ “in principleâ€‌ but new LNG terminals, which object, are exempted. What is the logic behind all this “US and EU regulators discovered that with â€کopen access’ no one other than the occasional government-owned company is prepared to raise capital and take the commercial risk of building new LNG terminal capacity,â€‌ says a source.

“LNG terminals have a lot more technical and marine risk than pipelines. Few have an appetite for this unless they get the freedom to operate their investment as an ordinary business.

â€‌ Crucially though, he tells us that if India does go against industry opinion and introduce â€کopen access’, “Dahej, Hazira, and Dabhol would be exempt under the legal principle that fundamental laws affecting an investment cannot be changed retrospectively.â€‌ If Delhi presses ahead, “investment in new LNG terminals would simply come to a halt – as in the US and Europe - except possible investments mandated by the government at the expense of Indian taxpayers.

â€‌ Contrary to what the regulator assumes, “LNG terminals are not ports.â€‌ A LNG terminal “requires the services of a port to receive tankers.

â€‌ India has, we hear, “very successfully developed a model of attracting infrastructure funding by developing private ports such as those at Dahej, Hazira and other locations.â€‌ These ports “are owned, maintained, and managed by their investors.

They are not public ports.â€‌