PNGRB Notifies New Regulations for LNG Terminals, Drops Mandatory Third-Party Access Clause

New Delhi, May 18 – The Petroleum and Natural Gas Regulatory Board (PNGRB) has introduced new regulations mandating prior approval for setting up or expanding liquefied natural gas (LNG) import terminals in India. However, it has removed the earlier requirement for operators to reserve a portion of terminal capacity for third-party access.

Key Highlights of the New Regulations​

Titled "Registration for Establishing and Operating Liquefied Natural Gas Terminals Regulations, 2025", the rules create a structured framework to:

• Oversee LNG terminal operations
• Promote fair competition
• Prevent redundant investments

The move aligns with India’s long-term goal of increasing the share of natural gas in the energy mix to 15 percent by 2030.

Entities intending to develop new LNG import facilities or expand existing terminals must now obtain prior PNGRB approval before making a final investment decision (FID). The approval will be evaluated based on:

• Competition in the sector
• Avoidance of redundant infrastructure
• Equitable gas distribution
• Availability of evacuation infrastructure
• Protection of consumer interests

Major Shift: No More Mandatory Common Carrier Access​

In a significant departure from earlier drafts, the final regulations have dropped the clause requiring LNG terminals to reserve 20 percent of short-term uncommitted regasification capacity for third-party usage. The 2018 draft mandated this under a common carrier principle, but after industry opposition, PNGRB removed it in the 2023 draft. The final 2025 regulations follow this revised stance.

Business Plan and Feasibility Requirements​

Entities applying for new terminals must now present:

• A credible business plan for capacity utilization
• A detailed LNG or regasified gas evacuation plan
• A copy of the approved Detailed Feasibility Report (DFR)

These requirements do not apply to expansions of existing facilities.

Compliance, Penalties, and Security Deposit​

PNGRB holds the authority to:

• Suspend or terminate terminal registration
• Forfeit bank guarantees in case of regulatory breaches or unfair practices

Applicants must furnish a bank guarantee equal to 1% of the estimated project cost or ₹25 crore, whichever is lower. Additionally, PNGRB will approve a project’s completion schedule and can impose financial penalties for delays.

India’s Existing LNG Terminal Landscape​

India currently operates seven LNG terminals, including:

• Petronet LNG (Dahej, 17.5 MTPA)
• Shell (Hazira, 5 MTPA)
• GAIL India (Dabhol, 5 MTPA)
• Petronet LNG (Kochi, 5 MTPA)
• Indian Oil (Ennore, 5 MTPA)
• GSPC (Mundra, 5 MTPA)
• Adani Total Gas (Dhamra, 5 MTPA)

According to PNGRB, streamlining LNG terminal regulation will ensure efficient infrastructure use, competitive pricing, and reliable supply, ultimately benefiting end consumers.