The Oil and Gas Regulatory Authority (OGRA) is the primary body responsible for regulating the Liquefied Natural Gas (LNG) sector in Pakistan. The regulation is conducted under the OGRA Ordinance, 2002, and the OGRA (LNG) Rules, 2007. This article provides a detailed guide for clients seeking to obtain a licence for establishing and operating an LNG Terminal.
Understanding LNG and Its Regulation
Liquefied Natural Gas (LNG) is natural gas that has been cooled to a liquid state, making it easier to store and transport. The regulation of LNG terminals ensures that the infrastructure and operations meet stringent safety, environmental, and technical standards. OGRA oversees this regulatory framework, ensuring compliance with the LNG Rules, 2007.
Categories of Licences Issued by OGRA
OGRA issues various categories of licences related to the LNG sector, including:
- Licence for LNG Terminals
- Licence for LNG Storage Facilities
- Licence for LNG Regasification Units
This article focuses specifically on the requirements and processes for obtaining a licence for an LNG Terminal.
Requirements for Establishing an LNG Terminal
The process of obtaining a licence involves several critical steps and the submission of various documents. Here are the detailed requirements:
- Application Form:
- The application must be submitted in the prescribed format as set out in the OGRA (LNG) Rules, 2007.
- Licence Fee:
- A Pay Order/Bank Draft of Rs. 1,000,000/- in favour of the Oil & Gas Regulatory Authority, payable at Islamabad.
- Company Registration:
- Attested copy of the company’s incorporation certificate.
- Attested copy of the Memorandum and Articles of Association.
- Attested copies of ID cards of all directors/partners.
- Financial Competence:
- Proof of financial competence issued by a bank. The format should certify that the company or its chief executive maintains an account with the bank and has sufficient financial resources equivalent to US $10 million for setting up the LNG Terminal infrastructure.
- Technical Competence:
- Detailed technical specifications and engineering designs of the proposed LNG Terminal.
- Profiles of key technical personnel with relevant experience in LNG operations.
- Environmental and Safety Compliance:
- Environmental Impact Assessment (EIA) report approved by the Environmental Protection Agency (EPA).
- Safety management plan outlining measures to mitigate risks associated with LNG operations.
- Location Details:
- Exact location of the terminal site along with a certified map indicating the layout of the facility.
- Project Feasibility Study:
- A comprehensive feasibility study including market analysis, financial projections, and risk assessments.
- Site Verification Fee:
- A Bank Draft/Pay Order of Rs. 50,000/- in favour of the Oil & Gas Regulatory Authority for site verification.
Application and Review Process
- Submission and Initial Review:
- Submit the complete application along with the requisite documents and fees. OGRA will review the application to ensure it meets all regulatory requirements.
- Communication of Shortcomings:
- If there are any deficiencies in the application, OGRA will communicate these to the project proponent for rectification.
- Appointment of Third-Party Inspectors:
- Once the application is complete, OGRA will appoint third-party inspectors to conduct a site inspection. The applicant must offer the site for pre-commissioning inspection within the stipulated timeframe.
- Inspection and NOCs:
- After the third-party inspection, the applicant must provide No Objection Certificates (NOCs) from the District Coordination Officer (DCO), Environmental Protection Agency (EPA), and the Explosives Department.
- Authority’s Decision:
- Upon receipt of the inspection report and NOCs, the complete case is submitted to OGRA for consideration. The Authority will decide on the grant of the licence within ninety days of receiving a complete application.
Issuance of Licence
If the application meets all the requirements and passes the inspections, OGRA will issue a construction licence for a period of one year. During this period, the applicant must complete the construction and request a final inspection for the operational licence.
Conclusion
Navigating the regulatory landscape for obtaining a licence for an LNG Terminal can be complex. However, with meticulous preparation and adherence to OGRA’s guidelines, the process can be smooth and efficient. Josh and Mak International offers expert legal assistance to guide clients through each step, ensuring compliance and successful licensing.
For further information and assistance, please contact Josh and Mak International. Our team of legal experts is dedicated to providing tailored solutions to meet your business needs in the LNG sector.
