PNGRB makes it mandatory for companies to get prior approval for LNG terminals

New Delhi: The Petroleum and Natural Gas Regulatory Board (PNGRB) has made it mandatory for oil and gas companies to get prior approval from the board for setting up Liquefied Natural Gas (LNG) terminals. A gazette notification published on May 9 said that the new rules will apply to any entity which is already operating or is desirous of establishing and operating an LNG terminal. It also said that there’s a 45-day window, beginning May 9, during which any company operating an LNG terminal after the appointed day (May 9) and immediately before the commencement of these regulations, shall not be required to submit intimation. However, all plans to set up LNG terminals will have to undergo scrutiny from the board starting May 9.

PSU Watch is now on Whatsapp Channels. Click here to join

What will companies have to do?

The companies will be required to inform the PNRGB about its plan to set up an LNG terminal before reaching a Final Investment Decision (FID). “The entity shall have a credible business plan for utilisation of capacity in the LNG terminal and shall submit the business plan and detailed evacuation plan of LNG or re-gasified natural gas from its LNG terminal, along with copy of its approved Detailed Feasibility Report (DFR) to the Board,” the new rules stated.

“The entity shall furnish a bank guarantee to the Board for an amount equivalent to one per cent of the estimated project cost of the LNG terminal in its Detailed Feasibility Report (DFR) or Rs 25 crore,” said the PNRB.

How will PNGRB evaluate proposals for setting up LNG terminals?

While evaluating proposals, PNGRB will be guided by these five objectives: promoting competition among entities, avoiding infructuous investment, maintaining or increasing supplies or for securing equitable distribution or ensuring adequate availability of natural gas throughout the country, protection of customers’ interest in terms of availability of natural gas and availability of natural gas pipeline infrastructure for evacuation of re-gasified Liquefied Natural Gas from the proposed LNG terminal. The board will be required to reach a decision within 30 days of receiving a proposal from a company.

After examining the application for registration, along with the documents provided, performance bank guarantee, and application fee submitted by the entity, PNGRB may issue a certificate of registration allowing the entity to establish or operate an LNG terminal for 30 years, commencing from the date of commissioning or from the date of registration whichever is earlier, said the new rules.

Explained: Why has PNGRB changed its rulebook?

Before May 9, there was no need for any entity to get a nod from the regulatory watchdog to set up LNG terminals. Natural gas has had a small share in India’s energy mix at about 5 percent for the past several years. In 2018, the Central government announced its plans to raise the share of natural gas in India’s energy mix from 6 percent (at present) to 15 percent by 2030. In line with that target, several companies have announced their plans to set up LNG terminals. India has seven LNG terminals with cumulative capacity of 45 MTPA. An additional 20 MTPA of LNG terminal capacity are expected to be added in the coming years. However, even as companies plan the expansion of LNG terminals, the existing terminals have recorded a capacity utilisation of 30 percent or lower. According to government data for April 2025, barring Petronet LNG Ltd’s 17.5 MTPA LNG terminal, which recorded a capacity utilisation of 98.1 percent, all the other LNG terminals registered an average capacity utilisation of 25.2 percent. In view of low capacity utilisation of the existing LNG terminals, the PNGRB has stepped in to regulate the registration and oversight of LNG terminals so that capacity utilisation is ensured.

“By regulating LNG terminals, PNGRB aims to ensure efficient utilization of infrastructure, and ultimately benefit end consumers through competitive pricing and reliable supply… This is a crucial enabler for India’s transition toward a cleaner, gas-based economy,” said PNGRB in a post on X.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)