Oil and Gas Alert – July 2021

Supreme Decree that amends the Regulation for the Installation and Operation of Natural Gas Vehicle (NGV) Retailing Establishments, adopted by Supreme Decree N° 006-2005-EM, was amended

Through Supreme Decree Nº 016-2021-EM (“Supreme Decree“), published on July 15, 2021 in the Official Gazette “El Peruano”, the Regulation for the Installation and Operation of Natural Gas Vehicles (NGV) Retail Establishments, adopted by Supreme Decree Nº 006-2005-EM (“NGV Regulation”), was amended to promote the use of Natural Gas Vehicles (“NGV“) in its different forms -such as Compressed Natural Gas Vehicles or “CNG” and Liquefied Natural Gas Vehicles or “LNG”- and to implement mechanisms and incentives to increase its consumption at national level.

The following are the most relevant amendments:

• The LNG Mobile Unit was incorporated as an agent subject to the scope of application of the NGV Regulation, which shall not be authorized to commercialize LNG with the general public, only with Direct Consumers of NGV registered in the Hydrocarbon Registry of OSINERGMIN (“RHO“), observing the provisions of Article 24 A of the NGV Regulation. 
• It was specified that any reference to NGV shall be understood to refer indistinctly to CNG or LNG, as appropriate, since NGV may be subject to compression for its subsequent release as CNG or be in a liquefied state for its subsequent release as LNG. 
• In line with the above, the existing definitions were adapted and new definitions were incorporated regarding equipment and agents within the scope of application of the NGV Regulation, to regulate the use of the technologies required to commercialize CNG and/or LNG. Likewise, it was specified that NGV Retail Establishments, NGV Direct Consumers and NGV Supply Establishments in Integrated Transport Systems may be supplied through Natural Gas coming from the distribution network, Compressed Natural Gas and/or Liquefied Natural Gas, as appropriate.
• The technical and safety standards were adapted to differentiate those applicable to CNG and LNG facilities.
• The purposes of the NGV Refueling Control System (“SCC“) were amended, so that it serves to contribute to guarantee the safety of the refueling operation, promote the use of NGV at a national level, and implement mechanisms and incentives to promote the consumption of NGV.
• The SCC Supervisory Board was empowered to issue provisions for the granting of incentives and financing programs for the promotion of NGV consumption and the conversion and/or purchase of NGV vehicles, with resources from the FISE.
• The functions of the Administrator of the SCC were expanded, in relation to the adequacy and improvement of the SCC and the sending of information to the agencies related to the SCC NGV, according to the guidelines established by the General Directorate of Hydrocarbons.
• Provisions were incorporated that condition the authorization of NGV Retail Sales Establishments in the RHO, in case such agents fail to comply with the provisions of the System Administrator or incur in irregularities in the operation of the SCC NGV. Initially, the registration would be suspended by OSINERGMIN and, in case the establishment incurs in the same non-compliances or irregularities detected within the year in which the registration in the RHO was suspended, OSINERGMIN could cancel its registration.
• The technical standards applicable to the facilities within the scope of application of the NGV Regulation were updated, included in the Third Complementary Provision of the device.
• It was provided that OSINERGMIN, exceptionally and at the request of a party, may adopt alternative and/or compensatory measures to those provided in the NGV Regulation for the design, construction, maintenance and operation of Natural Gas Vehicle (NGV) Retail Establishments, NGV Direct Consumers, Establishments Destined to NGV Supply in Integrated Transportation Systems (SIT) and LNG Mobile Units, related to international engineering practices that grant the same or higher degree of safety for the facilities and/or operations.
•  It was decided that OSINERGMIN, the Ministry of Transport and Communications and the Ministry of Production are required to adapt and/or adopt the provisions necessary for the implementation of the provisions of the Supreme Decree, within a term not exceeding ninety working days, from the entry into force of the Supreme Decree, that is, from July 16, 2021.

Any questions on this matter may be answered by Doctors  Jorge Pérez-Taiman (jpereztaiman@estudiorodrigo.com), Carolina Noriega (cnoriega@estudiorodrigo.com), Piero Scarafone (pscarafone@estudiorodrigo.com) and/or Talía Hormaeche (thormaeche@estudiorodrigo.com).