Here’s what you need to know about amendments to dry gas, LPG distribution law

The Saudi Cabinet approved in June the amendments to law of dry gas and liquid petroleum gas (LPG) distribution for residential and commercial purposes.

The official gazette, Umm Al Qura, published the amendments, including the following:

First: Amending Article (1) to read as follows:

The following words and phrases - wherever they are in this law - shall have the meanings stated next to each of them, unless the context requires otherwise:

Ministry: The Ministry of Energy

Minister: The Minister of Energy

Executive Regulations: The executive regulations for this law

Regulations: The technical and procedural regulations as well as guidelines issued by the ministry and referred to in Article (7) of this law.

Dry gas: It consists mainly of methane, and may include some ethane and small amounts of heavier hydrocarbon compounds and others.

Liquid petroleum gas (LPG): Hydrocarbon products, including a mixture of propane and butane, sold separately or as a mixture, as a fuel or as a feedstock.

Alternative natural gas: Gas produced by mixing LPG with air, and the mixture is similar to the combustion properties of dry gas.

Dry gas distribution network: A network that starts from the entrance to the main pressure-reducing station, and receives dry gas from a pipeline that transports it under high pressure and delivers it to consumer meters.

Independent gas distribution network: An independent distribution network that receives LPG, alternative natural gas, or dry gas from tanks and any other associated facilities, and delivers it to the consumers’ meters.

LPG distribution: Distribution of LPG through pipelines, tanks or cylinders from LPG facilities and selling it directly to another licensee or to the consumer.

LPG facilities: They include LPG tanks and pipelines, filling stations, storage yards, gas handling systems, and their accessories.

Aspects of the activity: The aspects of the activity mentioned in Article (4) of the law.

License: Permission granted to carry out any of the activities under the provisions of this Law, Executive Regulations and Bylaws.

Person: A natural or legal person.

Licensee: The person who obtained the license.

Retailer: The licensee to sell liquid petroleum gas cylinders in retail locations.

Residential Consumer: Any person whose residence is supplied with dry gas, LPG, LPG cylinders, or alternative natural gas for residential purposes.

Commercial Consumer: Any person whose commercial establishment supplies dry gas, LPG, LPG cylinders, or alternative natural gas for commercial purposes.

Consumer: The residential or commercial consumer.

Tariff: The financial consideration paid by the consumer to the licensee, including operational costs, capital costs and profit margin, in addition to the approved gas price.
 

Second: Adding the phrase “and alternative natural gas” to the end of Paragraph (3) of Article (2) to read as follows:
 

3- Encouraging investment in all aspects of activity, through creating a competitive environment that achieves a fair economic return and increases the opportunities for consumers in the various regions of the Kingdom to obtain dry gas, LPG and alternative natural gas services.
 

Third: Amending Article (3) to read as follows:
 

Without prejudice to the competencies and responsibilities of other relevant authorities, the ministry - in order to implement the provisions of this Law - shall assume all powers and tasks related to regulating the aspects of activity subject to this Law.
 

Fourth: Amending Article (4) to read as follows:
 

The aspects of the activity subject to this Law are:
 

1- Establishing, developing, operating or maintaining a dry gas distribution network or an independent gas distribution network, as well as linking residential and commercial facilities thereto, and providing the consumer with dry gas, LPG or alternative natural gas.
 

2- Transporting LPG from its sources to LPG facilities or an independent gas distribution network.
 

3- Establishing, developing, operating or maintaining LPG filling and storage facilities.
 

4- Wholesale distribution of LPG.
 

5- Retail sale of LPG cylinders in places designated for this purpose.
 

Fifth: Amending Article (7) as follows:
 

1- Amending the preamble of the Article to read as follows: “Without prejudice to the competencies of other bodies, the ministry shall specify in the regulations what ensures the achievement of the public interest, including the following: ….”
 

2- Amending Paragraph (1) to read as follows: "Rules for organizing the aspects of activity."
 

3- Amending Paragraph (2) to read as follows: “Requirements for issuing, amending, renewing and transferring licenses.”
 

4- Replacing the word “for consumers” instead of the word “for others” mentioned in Paragraph (8).
 

5- Adding the following paragraphs:
 

9 - The relationship between the licensee and the source of gas supply.
 

10- The procedures and standards necessary to ensure the provision of services provided to the consumer and the protection of his rights, including his right to obtain high-quality and efficiency services from licensees, at reasonable, competitive prices, as well as the procedures for dealing with complaints.
 

11- The controls and procedures that regulate the audit and inspection work for all aspects of the activity.
 

12- The necessary measures to support the national industry supporting the aspects of the activity, and to increase the local content with its various components, including jobs, services, manufacturing and technology.
 

13- The measures necessary to confront monopolistic practices, create an appropriate environment for fair competition, as well as attract and encourage investments in all aspects of activity, including prohibiting the licensee from entering into any agreement or making any arrangement or practices that would impede or limit competition.
 

14- The procedures and controls that ensure the safe supply of dry gas and LPG.