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Companies don't need city gas license to start LNG station, says regulator

This helps resolve long standing regulatory confusion over LNG stations and would help many companies such as Shell or Petronet LNG, which do not own city gas licenses but are keen on marketing LNG for transport, launch their own dispensing stations.

, ET Bureau|
Last Updated: Jun 03, 2020, 09.06 PM IST
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Agencies
LNG-
Both Shell and Petronet operate LNG import terminals in the country.
NEW DELHI: Anybody can start liquefied natural gas (LNG) dispensing station in the country and wouldn’t require a city gas distribution license for it, the regulator has said in a big step towards aiding India’s ambition of shifting some of its long-haul transport to natural gas.

This helps resolve long standing regulatory confusion over LNG stations and would help many companies such as Shell or Petronet LNG, which do not own city gas licenses but are keen on marketing LNG for transport, launch their own dispensing stations.

Shell had been seeking clarity from the government on retailing LNG, which it mainly plans to do using its chain of petrol pumps.

Both Shell and Petronet operate LNG import terminals in the country.

“LNG’s development as a successful fuel option in India will depend on an accessible infrastructure in place and for that greater market participation is imperative. We hope that the move by PNGRB will encourage more players to participate and result in a countrywide network of LNG stations being developed,” Shell said in an emailed response to ET.

The regulatory clarity could also expand opportunities for state fuel retailers as well as private retailers such as Rosneft-backed Nayara and the joint venture of Reliance Industries and BP.

GAIL, the country’s largest gas marketer which also has several city gas licenses, has already been in talks with ExxonMobil, Mitsui and fleet owners to build a network of LNG stations along the country’s 6,000km-long golden quadrilateral expressway.

“Any entity can set up an LNG Station in any Geographical Area (GA) or anywhere else, even if it is not the authorized entity for that GA. However, such entity shall comply with the Act and the extant Regulations of the Board, such as T4S Regulations,” the Petroleum and Natural Gas Regulatory Board (PNGRB) has said on its website after examining the issue for months. The PNGRB Act, which guides the regulator, nowhere says the LNG stations can be set up only by a city gas licensee, the regulator said in defence of its view.

A city gas distributor questioned PNGRB’s stand. “PNGRB says there is no regulation for LNG stations under the Act and yet it wants to make such stations comply with the Act,” a city gas executive said.

New LNG players wouldn’t quickly harm business prospects of city gas players, he said. “In the next few years, the impact on city gas players will be zero. Creating the whole LNG transport ecosystem would be a herculean task,” said the executive. “LNG station is going to be very capital-intensive with limited return. And if markets were to really turn, nothing stops a city gas player from converting its CNG units into LNG stations,” he added.
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