Matching Gas Supply with Demand: Regulatory Impacts on Infrastructure Development

Holligan, Jeff, BP Gas and Power N.A, United Kingdom

BP is currently involved in the development and marketing of natural gas supplies in a number of countries around the world. Some projects utilize only traditional pipeline facili­ties linking supply to market, while others require conversion of gas to LNG for shipment. This paper discusses projects in which natural gas reserves, once discovered, require sub­stantial investment in infrastructure to bring to market.

In all cases, the planning and construction of facilities spanning the project transporta­tion route requires close cooperation with regulatory authorities. The paper focuses on the variety and scope of interactions between developers and regulators recently experienced by BP in bringing projects to fruition.

In fact, “Maximizing the Value of Gas Resources” requires the efficient, timely and simul­taneous coordination of infrastructure development along the entire project transportation route. Such development typically requires a concerted effort to gain the necessary approvals from all host governments.

Countries’ regulatory approaches differ. Some have specialized agencies experienced in evaluating proposals and granting permits, while in others the process is newer and less for­malized. Some countries have multiple governmental jurisdictions each with the authority to require what might appear to be redundant or even conflicting approvals, while others have a more consolidated and seemingly efficient approach.

To be an efficient developer, a company must be structured to anticipate and success­fully negotiate the regulatory process. However, because both exporting and importing countries stand to gain from timely development and the expedited sale or increased supply of natural gas, mutually beneficial results are generally achieved.