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11th energy Summit Indian oil and gas Sector New Delhi, 17th October, 2008 organized by ASSOCHEM

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Title: 11th energy Summit Indian oil and gas Sector New Delhi, 17th October, 2008 organized by ASSOCHEM


1
11th energy SummitIndian oil and gas SectorNew
Delhi, 17th October, 2008organized byASSOCHEM
  • Discussion on
  • Regulatory issues in mid stream sector
  • by
  • BS Negi
  • Member
  • Petroleum and natural gas regulatory board,
    India

2
Contents
  • Oil and Gas- mid stream
  • Petroleum and Natural Gas Regulatory Board
    (PNGRB)
  • Pipeline network in India
  • Common carrier versus Contract carrier
  • Role of PNGRB in management of pipelines in the
    country
  • Government Policy- Pipeline and City Gas
    Distribution projects
  • Regulations related to Pipeline systems

3
Oil and gas mid stream
  • Pipeline transportation
  • Crude oil pipelines to refineries
  • Petroleum product pipelines- refineries or ports
    to terminals
  • Natural gas transportation pipelines

4
Petroleum and Natural Gas Regulatory Board
(PNGRB)
  • Created by an Act of the Parliament d on 31st
    March 2006
  • President assent accorded on 3rd April, 2006
  • Act was notified on 1st October, 2007
  • PNGRB Act excludes Crude oil pipelines and
    dedicated Petroleum product or natural gas
    pipelines from its purview

5
  • PNGRB- FUNCTIONS

6
Pipeline network in India
  • Petroleum products pipelines ( as on 1.4.2008)
  • Length- 11,413 Km.
  • Capacity-61.77 mmtpa (petroleum products)
  • Capacity utilization- 73
  • Players- IOCL, BPCL, HPCL,PETRONET,GAIL
  • Natural Gas pipelines( transmission)
  • Length- 8,673 Km.
  • Capacity- 150 mmscmd
  • Capacity utilization- 65
  • Players- GAIL, GSPCL, GGCL, RGTIL
  • Excludes RGTIL and GAIL P/L under commissioning

7
Common carrier and Contract carrier
  • Common carrier
  • Transportation is provided on as required basis
    and users are not committed to long term use of
    system
  • Transporter to construct additional capacity to
    meet future demand
  • Significant demand forecast required
  • Investment obligations
  • ROR to be assured

8
Contract carrier
  • Contract carrier
  • Transporter needs to provide additional
    facilities only where users are willing to sign
    firm contract for their use
  • Transporters are obliged to provide transmission
    services up to the extent of available spare
    capacity
  • System development takes place in response to
    demand from users
  • Project financing becomes easy
  • Assignment of capacity or trading helps develop
    infrastructure but

9
PNGRB definition of common carrier and contract
carrier
  • Common Carrier- Any pipeline for transportation
    of PPNG by more than one entity on non
    discriminatory open access basis
  • Contract Carrier- Any pipeline for transportation
    of PPNG by more than one entity pursuant to firm
    contracts for more than one year
  • The access capacity of contract carrier will be
    treated as common carrier

10
Common Carrier and Contract Carrier- a thought
  • Who is responsible for ensuring that desirable
    development takes place and who bears the cost
    and commercial risk arising from such
    developments?
  • Contract carrier is likely to provide a level of
    development which is broadly as appropriate and
    efficient as common carrier with the additional
    benefit of not requiring the granting of monopoly
    franchises to compensate for the additional risks

11
Common Carrier and Contract Carrier- a thought
contd
  • Where the Govt. or other agencies require
    socially desirable facilities to be developed,
    this can still be achieved under the contract
    carriage, with the relevant agency in effect
    providing subsidy by taking on the role of the
    contracting party for all or part of the relevant
    capacity

12
Common Carrier and Contract Carrier- Issues
  • Pipeline and CGD as common carrier capacity
    determination
  • Open access to pipeline and CGD
  • Access Code Pipeline capacity allocation, gas
    quality, grid connectivity
  • Unbundling
  • Affiliate code of conduct
  • Trading commodity and capacity
  • as a means to develop infrastructure
  • to stabilize price

13
Government Policy- Pipeline and City Gas
Distribution projects
  • Petroleum Products pipeline policy
  • Upto 300 km not common carrier
  • 25 extra capacity for common carrier
  • Crude oil pipeline excluded
  • Policy for development of Natural Gas Pipelines
    and City or local Natural Gas distribution
    networks policy
  • 33 extra capacity as common carrier
  • Open access, unbundling and affiliate code
  • ROU only after authorization by the Board
  • 100 FDI permitted

14
Government Policy- Pipeline and City Gas
Distribution projects contd
  • Gas utilisation policy ( as agreed in EGOM)
  • Applicable for one year
  • Priority-1, unmet Fertilizer requirement ( 9.5
    mmscmd)
  • Priority-2, unmet Power plant requirement ( 18
    mmscmd)
  • Priority-3, City Gas requirement( 5 mmscmd)
  • Priority-4, Refinery fuel
  • Priority-5, others

15
Regulations related to Pipeline systems
  • Petroleum and Natural Gas Regulatory Board(
    authoring entities to lay, built, operate and
    expand common carrier or contract carrier)
    regulations 2008 (Notified in May,2008)
  • Regulations for Determination of pipeline tariff
  • Regulations for declaring a pipeline as common
    carrier or contract carrier
  • Regulations for Access code ( July 2008)
  • Regulations for Access code ( July, 2008)
  • Regulations for Technical standard and
    specification including safety standards
  • Regulations for Emergency Response Disaster
    Management Plan
  • being notified

16
Regulations for Authoring common carrier and
contract carrier
  • EOI route or Suo motu
  • Selection through bidding process
  • Level playing field
  • Rules of the game are well defined
  • Technical qualifying criterion
  • Financial selection criterion
  • Capacity of the system
  • (i) Own use quantity
  • (ii) Contracted quantity
  • (iii) common carrier quantity ( I ii )/ 3
  • Total capacity ( I ii iii )
  • flow chart follows

17
(No Transcript)
18
Regulations for Determination of pipeline tariff
  • Tariff for EOI or Suo motu route authorized
    pipelines- as per the bid
  • Tariff for Government authorised pipeline or
    PNGRB authorised pipeline u/r 18(i) or other
    pipelines declared as common carrier or contract
    carrier, computed as per above regulation i.e.,
  • Return on capital employed _at_ 12 post tax
  • Capacity to be considered- first year 60, second
    year 70, third year 80, fourth year 90, fifth
    year 100
  • Pipeline divided in to zones _at_ 300 Km. including
    spurs of 10 of pipe line length or 50 Km. which
    ever is less
  • Tariff computed on the basis of fix number in a
    zone but increasing with successive zones on
    reducing slope

19
Regulations for declaring a pipeline as common
carrier or contract carrier
  • U/s 20 of the Act, PNGRB can declare a pipeline
    or city or local natural gas distribution net
    work as a common carrier or contract carrier
  • In the public interest
  • For promoting competition
  • Avoiding infructuous investment
  • For ensuring adequate availability of P,PPNG
  • Entity owning the pipeline an opportunity of
    hearing
  • Assess capacity and ensure that extra capacity is
    available for public utilization

20
Regulations for Access code
  • Common carries pipeline by authorization or by
    declaration
  • Capacity of pipeline as authorized or as computed
    with notified software module
  • Well defined rules for entry point and exit point
    construction and cost sharing
  • Gas quality parameters well defined both at entry
    and exit point
  • At entry point
  • Gas heat value band
  • Impurities level at inlet point in the gas
  • Hydraulic condition (Pressure, temp. Volume)

21
Regulations for Access code contd
  • At exit point
  • Gas heat value at exit point to meet consumer
    requirement
  • Impurities level to be within consumer acceptable
    band
  • Pressure, temp. and volumes to be as per contract
    between transporter and the shipper
  • Limits well defined for over drawl, under draw,
    positive and negative imbalance
  • Provision for penal action for default
  • Gas supply to any place from any place for any
    one at competitive cost is the motto

22
Regulations for Technical standard and
specification including safety standards
  • Function of the Board as per Section 11 (i) of
    the Act.
  • Applicable to activities relating to
    construction and operation of pipelines and
    infrastructure projects in downstream petroleum
    and natural gas sector
  • Board has constituted a Advisory Committee
  • The Advisory Committee has constituted ten
    sub-committees to assess the adequacy of existing
    standards suggest addition deletion or
    re-writing of the standards

23
T4S sub-committees
SN Sub-Committee Headed by
1 Cross Country Pipeline IOC
2. CGD IGL
3. Refining, Processing, LNG Terminal RIL
4. LPG Bottling and Storage IOC
5. POL Depot and Terminal HPCL
6. Retail Outlets BPCL
7. Commercial Storage, Crude, POL and NG EIL
8. Access Code GAIL
9. Accreditation Criterion QCI
10. ERDMP Mr. B.C.Bora

24
Regulations for Technical standard and
specification including safety standards contd
  • Uniform standard for pipeline design,
    construction, commissioning and operation
  • Population density classification
  • Design pressure
  • Construction standard, safety, record keeping,
    third party inspection
  • Commissioning requirement spelt out
  • Operational requirement
  • Trained manpower
  • Safety requirement
  • Record keeping
  • Accident prevention, reporting and ERDMP
    management

25
T4S Specific to Pipeline Safety
  • Pipelines spread through out country prone to
    affect wider section of society in case of leak,
    burst, fire etc.
  • Safety features
  • Provision of SV and Venting to contain the
    effect of leak
  • Pipeline protection through coating and CP
  • Intelligent Pigging
  • Pipeline patrolling foot patrol, vehicle,
    helicopter
  • Pipeline surveillances with GPS based monitoring,
    CCTV, Satellite based scanning vibration
    sensing through optical fiber optic system
  • Leak detection module
  • Central Gas Management

26
Regulations for Emergency Response Disaster
Management Plan
  • All kind of accidents codified
  • Accident reporting system standardized
  • Resource planning standardized
  • Mutual aid system made mandatory
  • Involvement of various authorities clarified
  • ERDMP formats and document standardized for
    uniform implementation
  • Skill mapping and training needs stressed
  • Ensures corporate involvement

27
Role of PNGRB in Management ofPipeline network
in the country
  • Summary
  • Develop mid stream infrastructure which is
    totally inadequate to meet country's requirement
  • Allow a level playing field to all players
  • To provide competition with well defined rules
  • To ensure optimal utilization of infrastructure
  • Ensure uniform design, operation and safety
    standards across the country
  • Provide growth potential to all stake holders-
    entrepreneurs, manufacturers, suppliers,
    investors, marketers, academia etc
  • Ensure that shipper can transport his commodity
    from any place to any place at reasonable cost

28
Let us jointly manage the mid stream sector
  • THANKS
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