Sun. Jun 20th, 2021

City gas distribution

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#77 Imbalance Management Service

10 min read
  1. PNGRB has issued a notification on regulation of Imbalance Management Service on 29th April, 2016. This regulation is called the Petroleum & Natural Gas Regulatory Board (Imbalance Management Services) Regulations, 2016. These regulation shall remain applicable till 31st Oct 2020.

Some of the important definition to be known before understanding this regulations are;

  1. Act” means the Petroleum and Natural Gas Regulatory Board Act,
    2006;
  2. Board” means the Petroleum and Natural Gas Regulatory Board
    established under sub-section (1) of section 3 of the Act;
  3. GTA” means Gas Transportation Agreement between transporter and
    shipper;
  4. Imbalance Management Services” means such services that enable
    customers or shippers to manage their imbalances in an orderly fashion;
  5. shipper” means a consumer, a marketer or any entity which utilizes the capacity in the natural gas pipeline;
  6. transporter” means an entity authorized by the Board or authorized by the Central Government for laying, building, operating or expanding a natural gas pipeline.

These regulations shall apply to a natural gas pipeline covered under the provisions of regulations 4, 17 and 18 of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008.

The various terms and conditions for providing imbalance management services are as follows;

  1. A transporter shall provide, to the extent it is technically and operationally feasible, imbalance management services being deferred delivery services to facilitate shippers to manage transportation imbalances. For this purpose, a deferred delivery service is one under which a transporter and a shipper, under a separate agreement, agree on a day-wise plan for receipt of the shipper’s natural gas quantities into the pipeline and for its delivery by the transporter to shipper on a deferred basis after a few days subject to pipeline capacity availability.
  2. The transporter shall provide the facility of the imbalance management
    services referred in above paragraph (marked in red color) on a non-discriminatory basis but without affecting its ability to meet the rights and obligations under its gas transportation agreements with other shippers.
  3. The transporter may charge a fee for providing the imbalance management services referred in above paragraph (marked in red color) from the shipper utilizing such service where the charge for the service shall be based on the number of days such service is utilized.
  4. The transporter in its agreement with the shipper shall mention the charges for the imbalance management services referred in above paragraph (marked in red color) but such charge shall not exceed twenty five per cent of the applicable transportation tariff for the relevant natural gas pipeline.
  5. The amount received by the transporter from the imbalance management services referred in above paragraph (marked in red color) shall be allowed to be retained by it over and above the transportation tariff for the pipeline in accordance with the provisions of the relevant regulations of the Board.
  6. In case a transporter denies a request from the shipper for the imbalance management services referred in above paragraph (marked in red color), the reasons for denial shall be provided by the transporter to the shipper.
  7. A transporter shall provide information on the details of the imbalance management services referred in above paragraph (marked in red color) and the amount received from such services for the financial year to the Board through a statement certified by a Chartered Accountant to be filed within sixty days from the end of the relevant financial year.
  8. The Board may permit a transporter to undertake projects for other imbalance management services (besides deferred delivery services) from time to time on a pilot basis with a view to include such imbalance management services in the regulations on such terms and conditions as may be decided by the Board.

On 17-10-2020, PNGRB has issued a draft amendments in the above regulation in which the following points are considered;

  1. Regulation 1, sub-regulation 2 of IMS which is “These regulations shall remain applicable till [31st October 2020]” shall be deleted.
  2. in regulation 2, sub-regulation (1), after clause (d) the following clause shall be inserted namely: –“(da) operational balancing agreement” or “OBA” means an agreement among the transporters of interconnected natural gas pipeline in respect of balancing the differences in the scheduled and actual quantities of natural gas at agreed delivery and receipt points;”
  3. in regulation 3, the following regulation shall be substituted, namely: – “These regulations shall apply to a natural gas pipeline covered under the provisions of regulation 9, 17, 18, a dedicated pipeline which is converted into a natural gas pipeline under the provisions of sub-regulation (1) or (2) of regulation 19 of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008 and a natural gas pipeline authorized by the Board pursuant to a policy directive issued by the Central Government under sub-section (2) of section 42 of the Act.”
  4. in regulation 4 sub-regulation (1), the following sub-regulation shall be substituted, namely: – “(1) Subject to availability of pipeline capacity and without affecting the services to any shipper, transporter shall provide the following imbalance management services to a shipper to manage transportation imbalances, namely: –
  1. Parking service: shall mean a service under which the transporter and shipper agree on a day-wise plan for receipt of agreed quantities of shipper’s natural gas into the pipeline at one or more agreed points for parking in the pipeline and subsequent day-wise re-delivery of the agreed quantities by the transporter to shipper, either at the same point or any other point on the pipeline.
  2. Provided that in case the point or points at which the natural gas is received is different than the point or points at which such gas is re-delivered, the shipper shall also pay to the transporter the applicable transportation tariff.
  3. Provided further that natural gas parked but not withdrawn within the agreed period shall be treated to have created a positive imbalance and dealt with in accordance with Petroleum and Natural Gas Regulatory Board (Access Code for Common Carrier or Contract Carrier Natural Gas Pipelines) Regulations, 2008;
  4. Lending service: which shall mean a service under which the transporter and shipper agree on a day-wise plan for lending of agreed quantities of natural gas by the transporter to shipper at one or more agreed points and subsequent agreed day-wise return of such loaned quantities by shipper to the transporter either at the same point or any other point on the pipeline.
  5. Provided that in case the point or points at which the natural gas is loaned is different than the point or points at which such gas is returned, the shipper shall also pay to the transporter the applicable transportation tariff.
  6. Provided further that natural gas loaned but not returned within the agreed period shall be treated to have created a negative imbalance and dealt with in accordance with Petroleum and Natural Gas Regulatory Board (Access Code for Common Carrier or Contract Carrier Natural Gas Pipelines) Regulations, 2008;
  7. Netting service: which shall mean a service under which the shipper offsets its positive and negative imbalances under different Gas Transportation Agreements with the transporter; and
  8. Trading service: which shall mean a service under which more than one shippers offset their positive and negative imbalances under different Gas Transportation Agreements resulting into reduction of their total imbalances.”
  1. in regulation 4 sub-regulation (4) of IMS, the following sub-regulation shall be substituted, namely: – “(4) The transporter shall charge from the shipper an amount not exceeding rupees fifteen per MMBTU for imbalance management services referred as Parking & Lending service and an amount not exceeding rupees one and paisa fifty for services referred as Netting & Trading service”
  2. in regulation 4 sub-regulation (5) of IMS, the following sub-regulation shall be substituted, namely: – “(5) fifty percent of the amounts accrued to the transporter from imbalance management services referred to in sub-regulation (1) shall be considered as miscellaneous income for determination of tariff under Petroleum and Natural Gas Regulatory Board (Determination of Natural Gas Pipeline Tariff) Regulations, 2008 Provided that fifty percent of the amounts accrued to the transporter from imbalance management services referred to in sub-regulation (1) in respect of pipelines authorised under regulation 9 of Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008 shall be deposited in the Escrow account maintained by the Board within the time and manner as detailed in Petroleum and Natural gas Regulatory Board (Access Code for Common Carrier or Contract Carrier Natural Gas Pipelines), Regulations, 2008.”
  3. in regulation 4, sub-regulation (8) of IMS the words “(besides deferred delivery services)” shall be deleted;
  4. in regulation 4 of IMS, the following sub-regulation shall be inserted after sub-regulation (8), namely: – “(9) Under an OBA, all the imbalances at the interconnect point of natural gas pipelines are operational imbalances and may be cured only by the parties to an OBA. In case transporters of two interconnected pipeline have entered into an OBA then the transporters shall consider the two pipelines as single gas balancing network for measuring the imbalance quantities of the shipper who has availed the imbalance management services from both the transporters. (10) Transporter shall publish relevant information about imbalance management services along with the applicable charges on its website.”

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