OGRA opens up LNG market

Sets transportation tariff for liquefied natural gas shippers

ISLAMABAD:

The Oil and Gas Regulatory Authority (Ogra) has set a transportation tariff for liquefied natural gas (LNG) shippers in an attempt to open up the market for private sector. At present, public gas utilities have a monopoly in the LNG market. In a statement, Ogra said that under its Gas Third Party Access (TPA) Rules 2018, it determined the transportation tariff for Sui Northern Gas Pipelines Limited (SNGPL) for financial years 2019- 20 and 2020-21.

Ogra has allowed a tariff of Rs29.58 per million cubic feet (mcf) for the transmission network and Rs101.75 per mcf for the distribution network. SNGPL, however, had claimed tariffs of Rs38.85 per mcf and Rs125.77 per mcf for the transmission and distribution network respectively. The transportation tariff has been determined for the shipper who transports gas through the SNGPL’s network.

The regulator observed that in the case of distribution, the petitioner (SNGPL) had shown its inability to calculate capacity of the system. It added that the present gap between supply and demand of natural gas coupled with reduced pressure was the major constraint to calculating the available capacity of the system. While calculating the throughput of distribution network, SNGPL excluded the volumes of gas carried to Pakistan Oilfields Limited (POL), Pakistan Petroleum Limited (PPL) and Pak Arab Refinery as well as unaccounted-for-gas (UFG) volumes.

The regulator pointed out that the approach adopted by SNGPL based on throughput was not in accordance with the TPA Rules. “Rather it is the petitioner’s own misinterpretation.” It observed that a TPA regime had been implemented to proceed towards liberalisation of the gas industry to foster competition and reduce tariff, while improving energy supply through the injection of additional volumes by potential suppliers. “This scheme is a win-win situation for the petitioner and potential shippers as it will result in supply of additional volumes to customers, thus addressing issues of reduced pressure, volume curtailment, etc,” the statement said.

“The authority also considers it important to impress upon the petitioner to facilitate the TPA regime and avoid banging on non-convincing reasons for declaring supply to consumers on the distribution network by third parties as unfeasible.” It was highlighted during a hearing held earlier that the petitioner was enjoying a monopoly in the gas market and was not providing the opportunity to other shippers. United Gas Distribution Company Limited (UGDCL), despite a lapse of around eight years, could not bring even a single cargo owing to various hindrances in the system. “Such continued practice by the petitioner will result in collapse of the entire TPA regime, which will fail to achieve its objective,” the regulator warned.

SNGPL’s management was requested to provide details of shippers and their contracted capacity. Prospective shippers are in the market but restrictions have been placed by the transporter to prevent the shippers from supplying gas to the existing consumers, it said.