In this Law, the following words and phrases shall have the meanings assigned thereto, unless the context requires otherwise:

• Ministry: Ministry of Energy.

• Minister: Minister of Energy.

• Implementing Regulations: Implementing Regulations of this Law.

• Bylaws: The technical and procedural regulations and guidelines issued by the Ministry and referred to in Article 7 of this Law.

• Dry Gas: Gas which mainly consists of methane, and which may include an amount of ethane, small quantities of heavier hydrocarbon compounds, and other components. The Bylaws shall specify the properties and characteristics of dry gas.

• Liquefied Petroleum Gas (LPG): Hydrocarbon products consisting of a mixture of propane and butane, which are sold separately, or as a mixture, fuel, or feedstock. LPG may contain a small amount of pentane and heavier components, and it is stored in a liquid state under special storage conditions inside pressure vessels. The Bylaws shall specify the properties and characteristics of LPG.

• Synthetic Natural Gas (SNG): A mixture produced by mixing LPG with air which has properties similar to the properties of combustion of dry gas. The Bylaws shall specify the properties and characteristics of SNG.

• Dry Gas Distribution Network: A network which starts at the entrance of the main pressure reducing station and which receives high pressure dry gas from a transport pipeline and delivers it to the gas meters of consumers. The network consists of distribution pipelines, control valves, pressure reducing substations and any other associated facilities, gas meters, filters, odorizers, and monitoring and control systems.

• Independent Gas Distribution Network: An independent distribution network that receives LPG, SNG, or dry gas from storage tanks and any other associated facilities, and delivers it to the gas meters of consumers. The network consists of distribution pipelines, control valves, storage tanks and any other associated facilities, gas meters, filters, and monitoring and control systems.

• LPG Distribution: Distributing LPG using pipelines, tank trucks, or cylinders from LPG facilities, and selling it directly to another licensee or to consumers.

• LPG Facilities: Facilities which include LPG storage tanks, transport pipelines, filling stations, storage yards, and gas handling systems, and the accessories of such facilities.

• Activities: The activities provided for in Article 4 of this Law.

• License: A permission granted for carrying out any of the activities in accordance with the provisions of this Law, the Implementing Regulation, and the Bylaws.

• Person: A natural or legal person. Licensee: A person holding a license.

• Retailer: A person who is licensed to sell LPG cylinders in retail outlets.

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

• Commercial Consumer: Any person whose commercial establishment is supplied, for commercial purposes, with dry gas, LPG, LPG cylinders, or SNG. Any governmental or industrial establishment shall be deemed a commercial consumer if the consumption of such establishment does not exceed the quantity determined by the Ministry in accordance with the requirements of encouraging investment in the field of gas distribution.

• Consumer: A residential consumer or commercial consumer.

• Tariff: The financial consideration paid by the consumer to a licensee which covers operating costs, capital costs, and profit margin, in addition to the approved gas price.

This Law aims to:

• 1. regulate the activities in a manner that serves public interest and protects the rights and interests of consumers and licensees, including ensuring compliance with approved policies relating to the activities and with the safety requirements for supplying gas to consumers;

• 2. ensure that the activities are of high quality in terms of relevant environmental standards and measures as well as the work methods and technologies used therein, and encourage relevant research and development and the localization of technology; and

• 3. encourage investment in the activities by creating a competitive environment which ensures a fair economic return and enables consumers in the Kingdom’s provinces to receive dry gas, LPG, and SNG services.

Without prejudice to the powers and duties of other relevant entities, the Ministry shall, in implementation of the provisions of this Law, assume all the powers and duties necessary for regulating the activities subject to this Law. In particular, the Ministry shall:

• 1. prepare, approve, and update a long-term plan for the provision of sufficient quantities of dry gas and LPG for residential and commercial consumption, and follow up on the implementation of such plan, in a manner that ensures optimal use;

• 2. issue the licenses necessary to engage in the activities and collect licensing fees;

• 3. promote competition, monitor and assess market conditions and relevant developments, and act in a manner that ensures adequate geographical coverage;

• 4. ensure the availability of dry gas and LPG supplies for the final consumer, monitor licensees to ensure that they operate dry gas distribution networks and independent gas distribution networks, and monitor retailers to ensure that they provide dry gas and LPG products to consumers; and

• 5. approve the tariff, pursuant to a decision by the Minister, taking into account the following:

  • a) Approved dry gas and LPG prices.

  • b) Enabling licensees to operate sufficiently to fully recover costs and achieve a fair profit margin, taking into account international best practices and the requirements of relevant laws and regulations.

  • c) Providing incentives to ensure the continuous improvement of technical and economic efficiency as well as the quality of service. d) Any existing contractual arrangements at the time this Law enters into force.

The activities subject to this Law shall include the following:

• 1. Constructing, developing, operating, or maintaining dry gas distribution networks or independent gas distribution networks; connecting residences and commercial establishments to such networks; and supplying consumers with dry gas, LPG, or SNG.

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

• 3. Constructing, developing, operating, or maintaining LPG filling and storage facilities.

• 4. LPG bulk distribution.

• 5. Retailing LPG cylinders in designated outlets

A person may not engage in any of the activities without obtaining a license.

A single person may be licensed to engage in more than one activity. The Implementing Regulations and the Bylaws shall specify the necessary conditions therefor.

Without prejudice to the powers of other entities, the Ministry shall specify in the Bylaws matters that ensure the achievement of public interest, including the following:

• 1.The rules regulating the activities

• 2. The requirements for the issuance, amendment, renewal, and transfer of licenses

• 3. The fees for each type of license.

• 4. The categories of licensees and their responsibilities and obligations.

• 5. The relationship between licensees, and between licensees and consumers.

• 6. The key performance indicators for licensees.

• 7. The accounting procedures and practices a licensee must adhere to in order to ensure the separation of expenses related to the activities from other expenses.

• 8. The procedures regulating the issuance of invoices and collection of payments for services and products provided by the licensee to a consumers or to any other licensee.

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

• 10. The procedures and standards necessary to ensure the provision of services to consumers and the protection of their rights, including the rights of consumers to receive high quality and efficient services from licensees at reasonable competitive prices as well as the procedures for dealing with complaints.

• 11. The controls and procedures governing auditing and inspection procedures for the activities.

• 12. The measures necessary to develop the national industry that supports the activities, and to increase local content, including jobs, services, manufacturing, and technology.

• 13. The measures necessary to combat monopolistic practices, create an environment that promotes fair competition, and attract and encourage investments in all the activities, including prohibiting licensees from entering into any agreements, making any arrangements, or engaging in any practices that may undermine or limit competition.

• 14. The procedures and controls that ensure the safe supply of dry gas and LPG and the amount of consumption that must be available to serve as a strategic stock”.

1. Licenses for the activities provided for in Article 4(1, 2, 3, and 4) of this Law shall be issued by inviting eligible persons to submit their proposals in accordance with the procedures specified in the Bylaws.

2. A licensee may, upon the Ministry’s approval, use the facilities of another licensee pursuant to an agreement concluded between them on commercial terms. If the licensees fail to reach an agreement, and such failure affects the provision of service to consumers, the Ministry may take the measures necessary to ensure the continuity of service”.

Repealed. 

A licensee shall comply with the provisions of this Law, the Implementing Regulations, and the Bylaws as well as the conditions of his license and the Ministry's instructions and decisions.