Indian regulator seeks oversight of LNG terminals

India's Petroleum and Natural Gas Regulatory Board (PNGRB) has issued a draft proposal for enhanced regulatory control over the country's existing and planned LNG import terminals.

The draft regulations released earlier this month has PNGRB taking significant control of India's existing terminals, which includes approval of a new terminal or expansion of capacity following feasibility reports, as well as setting up pipeline infrastructure for regasified LNG. Each project would require a certification of registration by PNGRB and may even face penalties if there are any start-up delays. Developers will also need to publicly disclose their regasification tariffs and other charges for transparency.

The regulations are seen as an effort to reverse dwindling utilisation rates at India's existing LNG import facilities, according to traders. The proposed regulatory framework may hinder new investments across India's gas sector more broadly by introducing the additional layer of oversight.

PNGRB board of directors typically being short of members results in delays in approvals for existing projects or new products. The Indian Gas Exchange (IGX) small-scale LNG contract was delayed to launch in April this year from the initial plan of late 2023. The contract was needed to help supply gas consumers located in areas not served by pipelines. Plans to introduce LNG contracts for over one-month delivery on the IGX are also being held up because the board does not have sufficient staff to accelerate the speed of decision making, sources with knowledge of the matter said.

Utilisation rates at India's seven LNG import terminals ranged from 15pc to 95pc in the April 2023-March 2024 fiscal year, with six operating at 30pc or lower despite a 16pc increase in LNG imports over the same period, oil ministry data show. Indian state-controlled LNG importer Petronet's 17.5mn t/yr Dahej LNG terminal had a 95pc utilisation rate, while Petronet's5mn t/yrKochi, state-controlled firm Gujarat State Petroleum's 5mn t/yr Mundra and state-controlled refiner IOC's 5mn t/yr Ennore terminals operated at 20pc or lower.

India plans to add at least 25mn t of LNG import capacity in the next few years on top of its existing 47.7mn t/yr import capacity.

India imports around 45pc of its daily gas needs, equivalent to around 190mn m³/d as LNG. The country plans to increase the share of gas in its energy mix to 15pc by 2030, which would increase overall demand to 600mn m³/d.

By Rituparna Ghosh