1. ARE ‘CAPTIVE’ AND ‘DEDICATED’ NATURAL GAS PIPELINES THE SAME CONCEPT?
No. Captive Pipelines and Dedicated Pipelines are distinct concepts under the regulatory framework governing natural gas transportation infrastructure in India.
The Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines) Regulations, 2008 primarily contemplate natural gas pipelines operating on either:
- Common Carrier basis; or
- Contract Carrier basis.
The definition of a Natural Gas Pipeline under the regulatory framework does not specifically contemplate utilization of pipeline capacity on a captive or dedicated basis.
Legislative Background
At the time of introduction of the Petroleum and Natural Gas Regulatory Board Bill, 2005 (subsequently enacted as the Petroleum and Natural Gas Regulatory Board Act, 2006), the Legislature was aware of the existence of multiple categories of pipelines.
The Guidelines for Laying Petroleum Product Pipelines dated November 20, 2002 recognized certain pipelines as captive pipelines for purposes of grant of Right of User under the Petroleum Pipelines (Acquisition of Right of User in Land) Act, 1962.
Such captive pipelines included:
- Pipelines originating from coastal or inland refineries extending up to approximately 300 kilometers from the refinery.
- Pipelines dedicated to supplying products to specific consumers from refineries or oil company terminals.
Categories of Pipelines
A detailed analysis of the Act, regulations and judicial precedents suggests that pipelines other than Common Carrier or Contract Carrier pipelines may broadly fall within the following categories:
Dedicated Pipeline
- A pipeline laid for supplying natural gas to one or more identified consumers.
- The pipeline is intended to meet the requirements of specific consumers.
- The transported gas is not intended for resale.
Captive Pipeline
- A pipeline laid exclusively for the use of the entity constructing it.
- The entity laying the pipeline is also the sole consumer of the transported gas.
- No third-party usage is contemplated.
Unlike Dedicated Pipelines, Captive Pipelines are intended exclusively for the owner’s internal consumption requirements.
It may be noted that captive pipelines, as recognized under the 2002 Notification, were not expressly incorporated into the framework of the Petroleum and Natural Gas Regulatory Board Act, 2006.
2. DOES PNGRB HAVE AUTHORITY TO REGULATE ALL NATURAL GAS PIPELINES?
No. The authority of the Petroleum and Natural Gas Regulatory Board (PNGRB) does not extend to every category of natural gas pipeline.
PNGRB’s authorization powers are generally confined to pipelines that operate as:
- Common Carrier Pipelines; or
- Contract Carrier Pipelines.
The Board does not possess authority to authorize entities for laying, building, operating or expanding pipelines constructed exclusively for the entity’s own use where such pipelines do not fall within the Common Carrier or Contract Carrier framework.
Accordingly, purely captive pipeline systems may fall outside the direct authorization regime contemplated under the Petroleum and Natural Gas Regulatory Board Act, 2006.
3. DOES PNGRB HAVE AUTHORITY TO DECIDE DISPUTES RELATING TO ALL NATURAL GAS PIPELINES?
The dispute resolution jurisdiction of PNGRB must be examined in light of the specific provisions of the Petroleum and Natural Gas Regulatory Board Act, 2006.
The role of the Board is primarily to regulate relationships between entities operating within the framework of the Act rather than directly regulating relationships between entities and consumers.
Jurisdiction under Section 12
Section 12 of the Petroleum and Natural Gas Regulatory Board Act, 2006 empowers PNGRB to adjudicate disputes:
- Between entities; and
- Between an entity and any other person.
Such disputes must relate to matters governed by the Act, including transportation of natural gas in accordance with Chapter V of the Act.
Jurisdiction under Section 24
Section 24 of the Act authorizes PNGRB to adjudicate matters relating to:
- Refining, processing, storage, transportation and distribution of petroleum, petroleum products and natural gas by entities.
- Marketing and sale of petroleum, petroleum products and natural gas, including quality of service and security of supply to consumers.
- Registration or authorization issued under Sections 15 and 19 of the Act.
The Board’s jurisdiction applies unless the relevant agreement between the parties contains a valid arbitration clause.
Disputes Involving Captive Pipelines
It may be argued that an entity governed by the Petroleum and Natural Gas Regulatory Board Act, 2006 may seek redress before PNGRB in relation to disputes involving an entity operating captive pipelines, depending upon the nature of the dispute and the applicable statutory provisions.
However, the extent of PNGRB’s jurisdiction would ultimately depend upon the facts of the particular case, the relationship between the parties and the provisions of the Act that are invoked.
CONCLUSION
Captive Pipelines and Dedicated Pipelines are distinct concepts under India’s natural gas regulatory framework. While Dedicated Pipelines are designed to serve specific identified consumers, Captive Pipelines are intended solely for the internal consumption requirements of the pipeline owner.
The regulatory jurisdiction of PNGRB primarily extends to Common Carrier and Contract Carrier pipelines. Consequently, questions relating to authorization and dispute resolution involving captive infrastructure must be examined carefully in light of the specific provisions of the Petroleum and Natural Gas Regulatory Board Act, 2006.
The distinction between Common Carrier, Contract Carrier, Dedicated and Captive Pipelines is fundamental to determining the scope of regulatory oversight and dispute resolution jurisdiction under India’s natural gas regulatory framework.
