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Oil Ministry says regulator nod not needed for CNG stations

The ministry recently issued an order saying 'no authorisation from Petroleum and Natural Gas Regulatory Board (PNGRB) is required for setting up of a CNG station.'

PNGRB has been since 2009 issuing licences to entities for city gas distribution (CGD) networks, essentially for retailing compressed natural gas (CNG) to automobiles and piped cooking gas (piped natural gas or PNG) to households. The Oil Ministry has, however, held that while PNGRB can issue authorisation for CGD, companies are free to set up a CNG stations without its prior approval.

'CNG station is not covered in the definition of 'city or local natural gas distribution network' provided in the PNGRB Act, 2006. No authorisation from PNGRB is required for setting up of a CNG station,' it said in a letter to GAIL India Ltd chairman and managing director.

Officials said this essentially means that PNGRB can issue authorisation or licence for CGD which entails laying of local gas pipeline network. But any entity can set up a CNG station and hire pipeline network of PNGRB-authorised CGD entity for taking gas to the retail pump.

The ministry's letter was in response to GAIL writing to the Oil Secretary asking if in terms of PNGRB Act, 2006, CNG stations are integral part of CGD network or not.

'The issue was examined in the ministry in consultation with the Department of Legal Affairs, Ministry of Law & Justice,' the ministry said while passing the directive on CNG stations not coming under purview of PNGRB. The directive comes as a blow to PNGRB which had in October invited bids for issuing licenses for retailing CNG and piped cooking gas in 14 cities including Bengaluru, Pune and Amritsar. Bids are due on 11 February, 2014. This is essentially the fifth round of CGD bidding, with the previous fourth round that was announced in September 2010, scrapped in November 2011. PNGRB had invited bids in 2009 for 13 cities in first two rounds. It hasn't been able to award most of the cities offered in third round because of litigations.

Australia’s Santos too wants to exit two oil & gas blocks


New Delhi: Close on the heels of mining giant BHP Billiton deciding to quit India, Australia’s Santos wants to exit its two oil and gas exploration blocks in Bay of Bengal due to delays in getting approvals to start work.

Santos, Australia’s third-largest oil and gas producer, was in February 2007 awarded two blocks south-east of Kolkata, has written to the government saying it has not been able to carry out exploration in the area because of defence restrictions and maritime boundary dispute with Bangladesh. It offered to surrender the blocks NEC-DWN-2004/1 and NEC- DWN-2004/2 on which it has already spent $60 million. Santos had won the blocks, that lie close to Bangladesh border, in the 6th round of New Exploration Licensing Policy. While an email sent to the company remained unanswered, an official at its India office declined to comment saying ‘it was a matter between Santos and the government of India.’

Sources said Santos told the government that exploration work at the two blocks had to be halted after Bangladeshi authorities raised a dispute about India’s right to explore hydrocarbon reserves across the International Maritime Boundary Line (IMBL). Thereafter, Santos invoked force majeure, which was agreed by the DGH and put into effect from 17 November, 2009, when it had suspend its seismic operations in the blocks. Separately, the Ministry of Defence prohibited carrying out of E&P activities in the block NEC-DWN-2004/1 and provided conditional clearance in respect of NEC-DWN-2004/2.

Santos was of the view that the MOD restrictions on the two blocks will not be lifted in near future, they said.

With its ‘legitimate expectations’ with regard to its investment not being satisfied, Santos felt the best way forward was to return the contracts for the two blocks to the Government without any ongoing obligations for either party, financial or otherwise.
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