Legal Advice on Licensing for Natural Gas and Related Activities in Pakistan

The regulation of natural gas and related activities in Pakistan falls under the jurisdiction of the Oil and Gas Regulatory Authority (OGRA), established under the OGRA Ordinance, 2002. This regulatory framework ensures that all activities, including the sale, transmission, and distribution of natural gas, re-gasified liquefied natural gas (RLNG), and flared gas, are conducted in a safe, efficient, and legally compliant manner. This article provides a detailed guide for clients seeking to obtain various licences related to these activities.

Categories of Licences Issued by OGRA

OGRA issues several categories of licences in the natural gas sector, including:

• Sale of Natural Gas
• Sale of Re-gasified Liquefied Natural Gas (RLNG)
• Sale of Flare Gas
• Transmission of Natural Gas
• Distribution of Natural Gas

Each licence category has specific requirements and procedures that must be followed. The following sections outline the detailed processes for obtaining these licences.

General Requirements for All Licences

All applications for licences must meet the following general requirements under Rule 4 of the NGRA Rules, 2002:

1. Corporate Documentation:
   • Attested copies of the memorandum and articles of association of the applicant.
   • Attested copy of the applicant’s certificate of commencement of business.
   • Attested copy of the latest yearly submission to the Registrar of Companies.

• Attested copy of the latest audited annual and unaudited half-yearly financial statements of the applicant.
• Attested copy of the corporate authorization allowing the submission of the application.

2. Subsidiary Documentation (if applicable):
   • If the applicant is a subsidiary company, the documents specified above must also be provided for the holding company.
3. Consent and Compliance:
   • Details of the consents required under applicable laws from persons other than OGRA for carrying on the relevant regulated activities and the status of such consents.
   • Details of the technical and financial expertise and resources available for carrying on the relevant regulated activities.
   • Details of the resources and expertise available to handle emergency situations arising from natural calamities, accidental or criminal acts or omissions.
4. Management and Ownership:
   • A list of the names and business addresses of the applicant’s senior management, including departmental and/or divisional heads.
   • A detailed explanation of any relationship if the applicant or any of its officers or directors owns, controls, or holds ten percent or more of the voting interest in any other entity engaged in the production, transmission, distribution, or sale of natural gas.
5. Market Data:
   • An estimate of the volume of natural gas to be transmitted, distributed, or sold.
   • Number and consumption details of consumers.
   • The applicant’s total annual peak day natural gas requirement.
   • Total past (if applicable) and expected curtailments of service by the applicant.
6. Additional Information:
   • Such other information or documentation as OGRA may require, including supplementary information to clarify the details contained in the application.

Specific Requirements for Each Licence Category

Sale of Natural Gas

To obtain a licence for the sale of natural gas, the applicant must provide the following specific information in addition to the general requirements:

1. Supply Details:
   • Details of the sources and quality of the natural gas supply, including forecasts of the available quantity from such sources.
2. Safety and Service Obligations:
   • Details of how the applicant proposes to meet the safety and service obligations prescribed by OGRA.
3. Technical Specifications:
   • Technical specifications of the facilities or pipelines involved in the sale of natural gas, including specifications for their design, construction, operation, and maintenance.

Sale of Re-gasified Liquefied Natural Gas (RLNG)

The process for obtaining a licence for the sale of RLNG includes the following steps:

1. Project Description:
   • A comprehensive description of the RLNG project, its purpose, capacity, location options, and preference.
2. Timetable and Costs:
   • An outline of the anticipated timetable for construction and operation, including critical events and approvals required.
   • An estimate of the project costs, including a detailed breakdown of expenses.
3. Environmental and Consumer Impact:
   • Identification and preliminary assessment of the project’s environmental impact, proposals for mitigating negative impacts, and obtaining the maximum benefits from positive impacts.
   • Identification of the consumers to be served by the project.
4. Feasibility and Market Surveys:
   • Studies confirming the technical, economic, and financial feasibility of the project.
   • Market surveys conducted within the past three years for the markets to receive new or increased service from the project.

Sale of Flare Gas

To obtain a licence for the sale of flare gas, the following specific requirements must be met:

1. Source and Quality:
   • Details of the sources and quality of the flare gas, including forecasts of the available quantity from such sources.
2. Safety and Service:
   • Details on how the applicant plans to meet the safety and service obligations prescribed by OGRA.
3. Technical Specifications:
   • Technical specifications of the facilities or pipelines involved in the sale of flare gas, including design, construction, operation, and maintenance specifications.

Transmission of Natural Gas

Applicants seeking a transmission licence must provide the following specific information:

1. Geographical and Technical Details:
   • Maps issued or certified by the Survey of Pakistan, drawn to an appropriate scale, showing the areas where the transmission facilities are or are proposed to be located, and the principal geographical features of those areas.
2. Supply Details:
   • Details of the sources and quality of the natural gas supply, including forecasts of the available quantity from such sources.
3. Safety and Service Obligations:
   • Details on how the applicant proposes to meet the safety and service obligations prescribed by OGRA.
4. Capacity and Throughput:
   • Details of the capacity and estimated throughput of the transmission facilities, per annum, for ten years following the proposed grant of the licence.
5. Technical Specifications:
   • Technical specifications of the transmission facilities (existing and proposed), including specifications for design, construction, operation, and maintenance.

Distribution of Natural Gas

For obtaining a distribution licence, the applicant must provide:

1. Geographical Coverage:
   • Maps issued or certified by the Survey of Pakistan, drawn to an appropriate scale, showing the territory within which the applicant wishes to distribute and sell natural gas.
2. Supply Details:
   • Details of the sources and quality of the natural gas supply, including forecasts of the available quantity from such sources.
3. Safety and Service Obligations:
   • Details on how the applicant proposes to meet the safety and service obligations prescribed by OGRA.
4. Technical Specifications:
   • Technical specifications of the distribution facilities (existing and proposed), including specifications for design, construction, operation, and maintenance.

Conclusion

Navigating the regulatory landscape for obtaining licences for the sale, transmission, and distribution of natural gas and related activities in Pakistan involves meticulous preparation and adherence to the comprehensive requirements set forth by OGRA. Josh and Mak International is committed to providing expert legal assistance to guide clients through each step of the licensing process, ensuring compliance and facilitating successful outcomes.

For further information and assistance, please contact Josh and Mak International. Our team of legal experts is dedicated to offering tailored solutions to meet your business needs in the natural gas sector.