Ogra unveils rules for gas supply by private sector

KARACHI: The Oil and Gas Regulatory Authority (Ogra) has allowed distribution companies to let private sector use their infrastructure for gas supply across the country where investors are taking interest in fuel imports.

Ogra notified Ogra Gas (Third Party Access) Rules 2018, enabling access to and use of gas pipeline infrastructure in a “cost-reflective and non-discriminatory manner”.

Under the rules on the Ogra’s website, a transporter – gas pipeline system operator – can offer and facilitate access to available capacity to shippers – licence holder to distribute and sell gas by utilising capacity of gas pipeline infrastructure – on first come first serve basis and remove obstacles to competition in providing transportation services.

Pakistan has two regasified liquefied natural gas (RLNG) terminals with 1.2 billion cubic feet/day capacity. The terminals are operated by private sector, but the government imports LNG. Private sector wants to set up merchant terminals with import authority. One such is being developed in a joint venture of Shell, Engro, Gunvor and Fatima Group, and expected by the second quarter of 2020.

Under the third party access rules, gas utility companies need to ensure that capacity hoarding by shippers is prevented by the development of commercial and contractual remedies within the access arrangement that financially penalise capacity hoarding through ‘use it or lose it’ and other measures.

The transporters are authorised to expand or extend the gas pipeline transportation system where it is economical or the potential shipper is willing to pay for its cost, and cooperate with other network operators to facilitate access to shippers of interconnected systems.

The shipper will be responsible for timely and accurate forecasts to the transporter for both gas deliveries at entry points and off-takes from exit points off the gas pipeline transportation system in accordance with the access arrangement.

The rules bind both shipper and transporter to deliver gas in accordance with the gas quality as approved by the authority while transporter has the right to refuse to accept or accept with certain conditions the delivery of gas at entry point which does not conform to the quality and specifications of gas. Similarly, the shipper has the right to refuse to accept or accept with certain conditions the delivery of gas at exit point, which does not conform to the quality and specifications of the gas.

The transporter will be responsible for physical balance of its gas pipeline transportation system by maintaining the appropriate pressures throughout the system as a reasonable and prudent operator.

The rules bar the transporter from subjecting the shipper’s gas to any load management on the transmission system.

Transportation tariffs in respect of transmission and distribution network will allow the transporter to collect its relevant and fairly allocated costs of service including the return on assets as approved by the authority from time to time.

Transportation tariff for services provided in the access arrangement will consist of fixed (capacity), and variable (throughput) charges according to the type of service to be provided by the transporter.