KOLKATA (miningweekly.com) – India’s upstream oil and gas sector regulator, Petroleum and Natural Gas Regulatory Board (PNGRB), has proposed to bring all new liquefied natural gas (LNG) storage and regasification projects under its regulatory framework.
The regulator’s draft 'Petroleum and Natural Gas Regulatory Board (Registration for establishing and operating LNG terminal regulations) 2018', has been put into circulation for feedback from industry stakeholders.
All oil and gas sector downstream companies intending to set up LNG terminals in the country will have to register with PNGRB and will have to “offer at all times 20% of the short term – less than five years – uncommitted regasification capacity, or 0.5 t/y whichever is higher, as common carrier capacity”, the draft regulation states.
In effect, the reserved capacity as common carrier could be booked by any third party to import and store LNG.
The LNG project will have to adhere to technical standards and specifications laid down by PNGRB and the investing company will have to furnish a bank guarantee equivalent to 1% of the estimated project cost of the terminal or $4-mililon, whichever was less.
The draft proposes that should a company construct multiple terminal projects, each project has to be registered separately and common carrier capacity will have to be reserved in each of the capacities. The registration of each terminal with PNGRB will be valid for 25 years.
Any violation of the terms and conditions of the regulations would result in cancellation of the registration of the terminal operator.
India has four operational LNG terminals, including the 15-million-ton-a-year capacity at Dahej, Gujarat, which Petronet operates, as well as three five-million-ton-a-year terminals operated by Shell at Hazira, Gujarat, GAIL at Dabhol, Maharashtra, Petronet at Kochi, Kerala.
Bringing LNG terminal projects within the regulatory framework comes against the backdrop of an expected sharp rise in imported LNG, as India aims for natural gas to account for 15% of its total energy needs by 2022 and for imports to rise to about 70-million tons a year over the next seven years.
This projected rise in natural gas imports will have to be matched by storage and regasification capacities with at least another 11 major storage and gasification projects slated for construction over the next seven years.
According to a section of analysts, if the target of gas accounting for 15% of total energy needs is to be met, the number of LNG terminals as backup infrastructure for imported fuel will be about 15 terminals over the next few years.