What is the regulatory regime that applies to LNG liquefaction and LNG receiving terminals? Are there any such terminals in your jurisdiction?

Oil & Gas

Brazil Small Flag Brazil

The construction and operation of LNG and REGAS terminals are regulated by the Petroleum Law, the Gas Law, and the ANP regulations. To date, there are very few LNG Terminals operating in Brazil. Open access rules to permit the third-party access to LNG terminals are not currently in place.

Croatia Small Flag Croatia

The regulatory regime that applies to LNG liquefaction and LNG receiving terminals is primarily designated by the Gas Market Act, Act on the Liquid Natural Gas Terminal and the Rules of Usage of the LNG terminal.

In the Republic of Croatia there are no operating LNG terminals at the moment. The first (floating) LNG terminal is currently being developed on the island of Krk.

The LNG terminal has the purpose to secure energy needs and increase security of gas supply through the provision of new gas supply route for the countries of Central and South-East Europe. The terminal is planned to begin with operation on 1 January 2021.

Development and construction of the LNG terminal is supported by the European Union by the contribution of EUR 101.4 million from the Connecting Europe Facility, which is centrally managed by the European Commission through the Innovation and Networks Executive Agency (INEA). The overall costs of the project are estimated to EUR 233.6 million and are to be financed by direct financial contribution of EUR 100 million from the Croatian state budget and a direct equity contribution of EUR 32.2 million from the LNG terminal company shareholders.

Greece Small Flag Greece

As of today the LNG receiving Terminal in Revithousa, is the only LNG receiving terminal in Greece and is owned and operated by DESFA SA. It is located on the island of Revithousa in the Gulf of Megara, west of Athens. In fact, the abovementioned Terminal is the third entry point of natural gas to the NNGS (National Natural Gas System), after the entry points from Bulgaria and Turkey. According to the provisions of article 2. Law 3428/2005 the Terminal is used for the import, unloading and gasification of LNG and for the liquefaction of the Natural Gas, including the ancillary services and temporary storage that are necessary for its re-gasification and its transmission into a Transportation System. The second LNG receiving terminal is about to start operating within 2020 close to city of Alexandroupoli (Floating storage Reglasification Unit-FSRU).

Italy Small Flag Italy

The construction of regasification terminals is subject to a very complex authorisation procedure, the main steps of which are:

(i) an assessment of the environmental impact of the infrastructure project;
(ii) carrying out Conference of Services – responsible, inter alia, for establishing with the local authorities any financial and environmental compensation for the territory on which the facility is to be constructed; and
(iii) Sole Authorisation from the MiSE for the construction and operation of the facility.

Regasification terminals receive liquid gas transported by ship and transform it into gaseous form. In this way, natural gas can be entered directly into the transportation network.

This is regulated by article 24 of the Letta Decree which: provides for an obligation on undertakings controlling infrastructure essential to the functioning of the gas system, including regasification facilities, to allow access to other undertakings; and governs in an absolute way cases of legitimate refusal to access (refusal of access must be set forth in a reasoned declaration and must be immediately communicated to the ARERA, to the Italian Anti-Trust Authority (AGCM), as well as to the MiSE. The ARERA shall decide by a reasoned measure in relation to the refusal within three months of such communication.

The terminal operating in Italy are:

  • the regasification plant of the company GNL Italia al Panigalia (La Spezia);
  • the Adriatic LNG terminal, which is a regasification terminal off the coast of Rovigo; and
  • the OLT Offshore LNG Toscana, which is a floating regasification terminal off the coast of Livorno in Tuscany.

The following entry point is currently being built:

  • the TAP (Trans Adriatic Pipeline) pipeline, which will be an interconnector pipeline between Greece and Italy through Albania, with an entry point in Italy at the Municipality of Melendugno, in Puglia.

The following projects have been authorised:

  • the regasification terminal offshore (Company: Api Nova Energia) of Falconara Marittima in the Marche Region; and
  • the regasification terminal (Company: LNG Medgas Terminal) of Gioia Tauro in the Calabria Region.

Mexico Small Flag Mexico

Permit from CRE.

LNG activities regulated and supervised by CRE are: (i) transportation; (ii) storage; (iii) distribution; (iv) public sale; (v) commercialization; and (vi) liquefaction.

In order to carry out activities related to LNG a permit from CRE must be secured in which CRE will include, among other matters, (i) terms and conditions applicable to the intended activities; (ii) obligations for permit holders; (iii) authorized infrastructure. 

Among the information and documents that CRE will assess prior granting a LNG permit are those documents evidencing that the project / infrastructure to be developed complies with all safety requirements, including those issued by the criteria published by ASEA.

Activities related to liquefaction of LNG are regulated by: (i) permits issued by CRE; (ii) administrative provisions issued by CRE regarding LNG activities; (iii) legislation applicable to LNG activities, mainly the Hydrocarbons Law and regulations on activities described in section 3 of the Hydrocarbons Law; and (iv) for dismantling and decommissioning of liquefaction activities, by the administrative regulation that has been issued by ASEA.

As per Mexican legislation there are no restrictions for private companies to invest in LNG projects and activities provided, they comply with all requirements as to obtain a permit from CRE, among them to be an entity incorporated under Mexican legislation.

Although the main regulatory entity that supervises LNG activities is CRE, there could be additional federal, local and municipal authorities that could supervise such activities (i.e. federal environmental authorities such as ASEA, local authorities regarding civil protection matters, among others).

Social impact evaluation.

As per the Hydrocarbons Law, prior obtaining a permit to develop hydrocarbons projects, companies must file a social impact study before SENER, which must include, among other matters: (i) identification, prediction and assessment of the possible social impacts that could derive from the project and activities; (ii) mitigation measures; (iii) social management programs.

In any case, SENER will issued a resolution which may include recommendations that must be observed by company’s prior development of their projects.

Additional licenses and permits.

LNG facilities are usually developed and constructed in land and therefore additional regulatory regime could apply, mainly in connection with matters that are of local and municipal jurisdiction (i.e. use of land, construction, operation, civil protection). Additional regulatory regime will vary depending the place in which the facility is to be developed.

Additional permits / authorizations of federal jurisdiction could be required for the development of a gas storage project, mainly regarding environmental matters such as an environmental impact study or environmental risk assessment.

Existing LNG terminals in Mexico.

In México there are three LNG receiving terminals located in the cities of Manzanillo, Altamira and Ensenada.

Morocco Small Flag Morocco

As for the construction and operation of oil and gas pipelines, LNG liquefaction and LNG receiving terminals refer to installations used to carry out ancillary activities.

Therefore, such projects are subject to the provision of the articles 50 et seq. of the Hydrocarbon Decree which provides for specific rules in relation to ancillary activities carried out by concession holders the purpose of which is to specify the terms and conditions under which an concession holder will build and operate such installations and finance such project.

It should be noted that the legal framework related to such activity will probably change in the context of the contemplated "gas to power" project which have been delayed over the last couple of years (please see our answer to question 18 below).

Mozambique Small Flag Mozambique

The current available general legal framework is silent in respect of the specific regulation of LNG facilities. Only Mozambique’s Special Regime for Natural Gas Liquefaction Projects in Areas 1 and 4 of the Rovuma Basin (Decree Law 2/2014, of 2 December) – which applies to concessionaires under existing EPCC’s, regulate any special purpose vehicles established by such concessionaires and any persons entering into contracts with concessionaires or special purpose vehicles (contractors, financiers and employees) as well as their subcontractors, and in connection with activities relating to the development and operation of Offshore Areas 1 or 4 and which are undertaken under existing EPCCs or any other contracts with the Government of Mozambique.

Accordingly, any SPV’s established by concessionaires must be incorporated in Mozambique, although SPV’s for the purposes of raising finance or undertaking sales and shipping activities may be incorporated in any “transparent” jurisdiction where the government of the jurisdiction can verify the ownership, management, control and fiscal situation of the investor (subject to Mozambique government consent). While this “transparent” jurisdiction standard is equivalent to the standard imposed on new concessionaires under the Petroleum Law, unlike the requirements of the Petroleum Law, neither the existing concessionaires of Areas 1 and 4 nor their SPV’s are required to be listed on the Mozambican Stock Exchange.

Currently, no LNG Facilities exist in Mozambique. The future LNG Facilities planned by the consortiums developing Areas 1 and 4 are expected to commence production only in 2023.

Nigeria Small Flag Nigeria

The Nigerian Liquefied Natural Gas Company (NLNG) has the sole mandate for production of liquefied natural gas in Nigeria. It drives LNG activities within Nigeria, for the international market. The Company is jointly owned by NNPC, Shell, Total and Eni.

LNG liquefaction and receiving terminals activities are regulated under the Petroleum Act (2004) and its subsidiary regulations, which include the following:

i. Petroleum Refining Regulations,
ii. LNG export is regulated by the Oil Terminals Act,
iii. Crude Oil (Transportation and Shipment) Regulations,
iv. Nigerian Ports Authority Act,
v. Pre-shipment Inspection of Export Act,
vi. Customs and Excise Act,
vii. Foreign Exchange (Monitoring & Miscellaneous Provisions) Act, and
viii. Foreign Exchange Manual (issued by the Central Bank of Nigeria).

Nigeria has an LNG Terminal in Bonny Island, Rivers State. It owns and operates six liquefaction units (LNG trains) which produces about 22 million metric tonnes per annum (mtpa), with a seventh train in the works. The NLNG also owns a gas transmission and liquefaction infrastructure including several LNG vessels through Bonny Gas Transport Limited (BGT), which is its subsidiary Company. Its customers however, own receiving and liquefaction terminals for LNG supplied by the company.

Bulgaria Small Flag Bulgaria

LNG liquefaction and LNG operation of LNG receiving terminals would be subject to a special licence under the Energy Act of the Republic of Bulgaria. The activity is regulated by the State Energy and Water Commission. No LNG are currently operating in the country. Closest delivery point for LNG is the Greek Revithoussa LNG Terminal. Bulgaria closed a first LNG purchase at Revithoussa in May 2019.

Indonesia Small Flag Indonesia

Yes, there are LNG facilities, including liquefaction and receiving terminals, in Indonesia. LNG facilities may be operated by upstream players as an ancillary activity to their main activities under the PSC (with the approval of the MEMR), or by a downstream business entity that engages in and is licensed to carry out processing or trading activities. Other licenses that the downstream business entity may have to obtain from the central and regional governments include licences related to HSE and land.

United Kingdom Small Flag United Kingdom

For offshore pipelines, a Pipeline Works Authorisation (PWA) must be applied for under the Petroleum Act. For most onshore pipelines, the permitting process requires an authorisation under the Pipe-lines Act 1962. In all cases, there will be various other requirements and consents that need to be obtained, including environmental consents.

Turkey Small Flag Turkey

Natural Gas Market Law and LNG Market License Regulation are the main pices of legislation that applies to market activities relating to LNG activities. Furhtermore, Regulation on the Technical Rules Applicable to the LNG Market and the Regulation on the Principles and procedures for the Use of LNG Storage Facilities also applies to LNG terminals. For being able to conduct LNG activities, a license allowing to do so needs to be acquired from EMRA.

There are on-shore and off-shore LNG receiving terminals in Turkey which are being operated under a license to store LNG.

One of the onshore LNG terminal in Marmara Ereğlisi, currently operates with a capacity of 5.9 million tons, being able to provide 8 billion cubic meters of gas annually. The other onshore terminal is located at Aliağa district (in İzmir) and is operated by Egegaz with a capacity of 4.4 million tons of LNG, and a compression capacity of 6 billion cubic meters annually.

When it comes to the offshore terminals, the first FSRU which had been run by Etki Liman İşletmeleri in Turkey had a storage capacity of 139,000 cubic meters and was able to provide 14 million cubic meters of gas to the Turkish network per day. The relatively new one (constructed in 2019), with a capacity of 170,000 cubic meters, is able to compress 28 million cubic meters of natural gas to the network on a daily basis. In addition to that, BOTAS has an FSRU in Hatay's Dörtyol district, with a storage capacity of 263,000 cubic meters (claimed to be the largest in the World), and with a compressing capacity of 20 million cubic meters of gas per day.

Absence of LNG liquefaction terminals in Turkey can be highlighted as a market gap and opportunity particularly for Eastern and Southeastern Regions of Turkey where it would be efficient to install and operate small / micro scale (up to 100 million m3) LNG Liquefaction terminals depending on the transportation costs of the natural gas to those regions and the difference in between the price of LNG and the natural gas.

Israel Small Flag Israel

The Natural Gas Authority regulates this industry, as it regulates the transportation and distribution of oil and gas to the Israeli market. The Hadera Deepwater LNG Terminal was launched in 2013 by INGL and transmits gas from the Tamar reservoir and tankers to Israel. Israel currently does not have a terminal for the liquefaction of LNG.

Norway Small Flag Norway

LNG facilities that form an integral part of the upstream production are subject to approval under the Petroleum Act of 1996 by the authorities of a Plan for development and operation of the facilities. Other permits for construction, operating and decommissioning is also required based on other laws.
The only LNG production facility in Norway is the Snøhvit LNG project, which was constructed to exploit the resources of three gas fields in the Barents Sea: Snøhvit, Albatross and Askeladd. There are a few small-scale LNG production facilities in the south of Norway serving the local market consumption.

United States Small Flag United States

The Federal Energy Regulatory Commission (FERC) is responsible for authorizing the siting, construction and operation of onshore and near-shore LNG import or export facilities in the U.S. under Section 3 of the Natural Gas Act. As a condition to issuing a permit, the FERC is required by law to find that the proposed projects are not inconsistent with the public interest. To satisfy the requirements of the National Environmental Policy Act of 1969 (NEPA), the FERC also prepares an Environmental Assessment (EA) or an Environmental Impact Statement (EIS) and will authorize the project if it finds that any adverse environmental impacts may reasonably be mitigated. The terms and conditions of LNG liquefaction or regasification services are not regulated.

Currently, there are more than 110 LNG facilities operating in the U.S. Some facilities export natural gas from the U.S., some import and regasify LNG to provide natural gas supply to the interstate pipeline system or local distribution companies, while others are used to store natural gas for periods of peak demand. There are also facilities which produce LNG for vehicle fuel or for industrial use. As of November 2019, the U.S. has six operating LNG liquefaction facilities for the export of U.S. LNG by ship: Sabine Pass, Cove Point, Corpus Christi, Cameron, Elba Island and Freeport LNG.

Updated: January 8, 2020