The Petroleum and Natural Gas Regulatory Board (PNGRB) has introduced new regulations mandating prior approval for companies planning to develop or expand liquefied natural gas (LNG) import terminals. The updated framework prioritizes competition, efficient infrastructure utilization, and equitable natural gas distribution, aligning with India's ambitious target to increase natural gas’s share in its energy mix to 15 percent by 2030. Notably, the new rules have eliminated the earlier mandate requiring LNG terminal operators to reserve capacity for third-party access, reflecting industry feedback. These regulations aim to streamline investments, ensure consumer protection, and foster a transparent LNG import landscape critical for India's energy transition.
Strengthening Regulatory Oversight for LNG Infrastructure
In a decisive move to streamline India’s LNG terminal sector, the PNGRB has released the Registration for Establishing and Operating Liquefied Natural Gas Terminals Regulations, 2025. The regulations impose a mandatory registration and approval regime on entities intending to establish new LNG terminals or augment existing facilities, signaling a shift toward tighter regulatory control.
A key objective of these rules is to prevent redundant or unproductive investments, while fostering competitive market dynamics among LNG terminal operators. This regulatory vigilance is designed to safeguard consumer interests by enhancing access to natural gas and ensuring reliable supply chains across India.
Prior Approval: A New Precondition for LNG Terminal Projects
Under the new mandate, any firm aiming to develop a new LNG import terminal must secure prior approval from PNGRB before proceeding to the final investment decision (FID). The same requirement applies to capacity expansions of existing terminals. PNGRB’s approval process will evaluate the potential for competition, the likelihood of overinvestment, the adequacy of supply, and the presence of viable gas evacuation infrastructure to ensure optimal functioning of these facilities.
Applicants must submit comprehensive documentation, including a credible business plan for terminal capacity utilization, a detailed evacuation strategy for LNG or regasified natural gas, and an approved Detailed Feasibility Report (DFR). However, it is important to note that the obligation to provide a third-party access (TPA) quota—previously proposed to ensure 20 percent of short-term re-gasification capacity availability for third parties—has been removed from the final rules following significant industry opposition.
Removal of Third-Party Access Requirement: Industry-Friendly Shift
The exclusion of the third-party capacity reservation is a noteworthy concession to industry concerns. Initially introduced in the 2018 draft regulations, the TPA clause aimed to foster open access by mandating LNG terminal operators to reserve a minimum share of uncommitted capacity for third-party use, thereby promoting market competitiveness and preventing monopolistic control.
However, stakeholders argued that such a provision could deter investment by creating operational uncertainties. After iterative consultations, the PNGRB decided to omit this requirement in the final regulations, issued in line with the revised draft from mid-2024. This pragmatic adjustment reflects a regulatory balancing act—securing market efficiency without stifling private sector participation in critical infrastructure projects.
Compliance, Penalties, and Safeguards
The new rules empower PNGRB with significant enforcement authority. The regulator can suspend or revoke terminal registrations, and even forfeit bank guarantees, should operators engage in unfair trade practices or breach regulatory mandates. To ensure commitment, operators must furnish a bank guarantee amounting to 1 percent of the estimated project cost or Rs. 25 crore, whichever is lower.
Additionally, PNGRB will oversee the approved terminal completion schedule and retain the authority to levy penalties for non-compliance. These mechanisms are intended to enforce accountability and timely project delivery, minimizing risks of delays that could hamper India’s energy supply security.
India’s Current LNG Terminal Landscape
India currently operates seven LNG terminals with varying capacities. The largest is Petronet LNG Ltd’s 17.5 million tonnes per annum (MTPA) facility at Dahej, Gujarat. Other prominent installations include Shell’s 5 MTPA terminal at Hazira, GAIL India Ltd’s 5 MTPA Dabhol terminal in Maharashtra, Petronet’s 5 MTPA Kochi terminal in Kerala, Indian Oil Corporation’s 5 MTPA Ennore terminal in Tamil Nadu, Gujarat State Petroleum Corporation’s 5 MTPA Mundra terminal, and Adani Total Gas Ltd’s 5 MTPA terminal at Dhamra, Odisha.
These terminals are crucial nodes in India’s LNG import infrastructure, feeding regasified natural gas into pipeline networks to fuel industrial, commercial, and residential demand.
Implications for India’s Energy Transition
By enforcing a robust regulatory framework for LNG terminals, PNGRB aims to optimize infrastructure utilization and stimulate healthy competition among operators. Such measures are expected to translate into more efficient operations, competitive pricing, and improved supply reliability—ultimately benefiting consumers.
These regulations are also aligned with India’s broader energy strategy, which targets raising natural gas’s share of the energy mix from approximately 7 percent today to 15 percent by 2030. LNG imports are integral to this vision, providing flexibility and diversification in energy sources as the country transitions toward cleaner fuels.
Conclusion
The PNGRB’s latest regulatory move signals a maturation of India’s LNG terminal ecosystem, balancing investor concerns with the imperative of market transparency and consumer protection. By mandating prior approval and imposing compliance obligations—while removing contentious third-party capacity reservations—the board fosters a more predictable and investor-friendly environment.
As India accelerates its clean energy ambitions, these regulations will play a pivotal role in ensuring that LNG terminal infrastructure scales efficiently and sustainably, supporting the nation’s energy security and climate goals in the decade ahead.
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