Based on Article (Seven) of the Law on the Distribution of Dry Gas and Liquefied Petroleum Gas for Residential and Commercial Purposes, amended by Royal Decree No. (M/112) dated 9/11/1443 AH, and pursuant to the regulatory role of the Ministry of Energy, this regulation has been prepared to specify the procedures and conditions for obtaining a license and practicing the activity of establishing a dry gas distribution network or an independent gas distribution network, or developing, operating, or maintaining it, connecting residential and commercial facilities thereto, supplying the consumer with dry gas, liquefied petroleum gas, or alternative natural gas, as well as the regulatory and technical requirements and the supervisory procedures that the licensee must comply with.

• 1- The words and phrases contained in this Regulation shall have the same meanings as those set forth in the Law of Distribution of Dry Gas and Liquefied Petroleum Gas for Residential and Commercial Purposes and its Executive Regulations.

• 2- The following words and phrases - wherever they appear in this Regulation - shall have the meanings indicated opposite each of them, unless the context requires otherwise:

  • Regulation: Regulation of Gas Network Activity for Residential and Commercial Purposes.
    Gas Network Activity: Establishing a dry gas distribution network or an independent gas distribution network, or developing, operating, or maintaining it, connecting residential and commercial facilities thereto, and supplying the consumer with dry gas, liquefied petroleum gas, or alternative natural gas.
    Independent Gas Distribution Network: An independent distribution network that receives liquefied petroleum gas, alternative natural gas, or dry gas from tanks and any other related facilities, and delivers it to the consumer’s metering devices, including distribution pipelines, control valves, tanks and any other related facilities, metering devices, separators, and monitoring and control systems.
    Service Provision Guide: The rules adopted by the Ministry that set the regulations for service provision between licensees and consumers, as well as the principles governing the relationship between service providers and consumers.
    License: A permit granted to carry out gas network activity.
    Licensee: The person who obtains a license for gas network activity.
    Tender Document: A bulletin issued by the Ministry containing detailed information regarding the tendering of gas network activity for competition, including technical, financial, obligations, regulations, and other aspects related to the tender.

• 1- The applicant for the license must fulfill the conditions and requirements for granting the license as stipulated in the Implementing Regulation and this Regulation.

• 2- The licensee must comply with the following:

  • A- All necessary conditions and approvals pursuant to the relevant laws.

  • B- The service delivery manual.

  • C- All devices, equipment, and related operations must comply with the requirements of the relevant authorities and international standards, including: the Saudi Standards, Metrology and Quality Organization, and the Saudi Building Code.

  • D- The engineering design must be from an engineering office accredited by the Saudi Council of Engineers.

  • E- Installation of measurement meters at consumers’ premises.

  • F- Annual periodic inspection and maintenance of devices, equipment, network, and its appurtenances, such as regulators, gas valves, gas leak alarm systems, and consumption measurement meters for the consumer.

  • G- Occupational health and safety system in accordance with international standards, such as: Occupational Safety and Health Administration (OSHA) standards.

  • H- Carrying out all improvements, additions, and repairs to assets, and replacing assets that have reached the end of their useful life, have been damaged, or have been proven unsafe by periodic inspection.

  • I- Preparing a comprehensive plan for safety, reliability, maintenance, and technical management, provided that the comprehensive plan includes the following:

    • • Operating gas systems ensuring the reduction of risks to the safety of property, the public, and consumers arising from the system, or interruptions in the transmission or supply of gas, and restoring interrupted gas supplies.

• Conducting a comprehensive quantitative risk assessment.

• Performing connection works for consumer meters by specialized personnel to avoid safety-related risks.

• Providing appropriate means to achieve full isolation of the network or any part thereof in case of emergency, sufficient means to access the network service and other equipment, maintenance thereof, providing appropriate means to preserve the network structure and operation, preparing a manual for operating and periodic maintenance procedures, and procedures for opening and closing consumer meters, with operations carried out by technicians trained in emergency procedures and response.

  • J- Not engaging in any practice that limits or disrupts fair competition in gas activities or any part thereof.
  • K- Not ceasing to practice the gas network activity except with prior approval from the Ministry.
  • L- Workers must wear personal protective equipment, including: appropriate work gloves and safety shoes.

• 3- A person may practice more than one activity among the activities subject to the system referred to in paragraph (1) of Article (Three) of the Implementing Regulation if the gas network activity is accounted for independently from the other activities.

• 4- In case of a dispute between the licensee of the independent gas distribution network activity and the licensee of the gas transmission activity from its sources to the liquefied petroleum gas facilities or the independent gas distribution network regarding any of the terms of the agreement, each party may submit a request to the Ministry for an amicable settlement between the two parties, and the Ministry shall take the necessary measures to ensure the continuity of service provision.

• The characteristics and specifications of gases subject to the provisions of the Law are as follows:

  • 1- Dry Gas: A mixture of primary compounds such as: methane (CH4), ethane (C2H6), and other hydrocarbon compounds in small proportions, such as: propane (C3H8), butane (C4H10), pentane and heavier (C5+), with a nitrogen content not exceeding (3%), and the specific proportions of these hydrocarbon compounds may vary based on the sources of dry gas, provided that the specifications of dry gas from the gas source affiliated with Saudi Arabian Oil Company (Aramco) conform to specification (120-A).
    2- Liquefied Petroleum Gas: A mixture of primary compounds such as: propane (C3H8), butane (C4H10), and other hydrocarbon compounds in small proportions, such as: propylene (C3H6), ethane (C2H6), and ethylene (C2H4), and the specific proportions of these hydrocarbon compounds may vary based on the external ambient temperature and the blending specifications approved from seasonal liquefied petroleum gas sources, provided that the specifications of liquefied petroleum gas from the gas source affiliated with Saudi Arabian Oil Company (Aramco) conform to specification (150-A).
    3- Alternative Natural Gas: Contains a high proportion of propane (C3H8) and butane (C4H10), which constitute the vast majority of its components, and is produced by mixing liquefied petroleum gas with air, with the mixture resembling the combustion characteristics of dry gas. The average mixing ratio of liquefied petroleum gas/air is (60/40), although this varies widely based on the gases composing the liquefied petroleum gas. The method of determining the mixing ratio is by calculating the (Wobbe) index of the mixture to be equivalent to dry gas.

• The Ministry invites those who meet the conditions and wish to obtain a gas network activity license to enter into competition according to the following regulations:

  • 1- The application for qualification shall be submitted according to the methods and time period determined by the Ministry by filling out the approved form and providing the required documents, such as:

    • A- Proof of technical capability and financial solvency to practice the gas network activity.
    • B- Administrative and technical expertise, financial systems, risk management policies, technical resources and their systems, operational procedures and their systems sufficient to fulfill commercial and regulatory obligations.
    • C- Any other documents requested by the Ministry to verify the obligations and requirements stipulated in the Law, the Implementing Regulation, and this Regulation.

  • 2- The Ministry shall review the qualification applications, verify the completeness of the required documents, and conduct the qualification to determine the eligible competitors.

  • 3- The Ministry shall notify the qualified competitors and announce this on its website.

  • 4- The Ministry shall send the tender booklet to the qualified competitors, open the door for inquiries from all competitors, and respond to them.

  • 5- The Ministry may amend the tender booklet, reissue it, or cancel it, as it deems appropriate.

  • 6- Competitors shall submit their technical proposals within the period specified in the tender booklet, and no proposal submitted after the deadline for receiving proposals shall be accepted.

  • 7- The Ministry shall examine the technical proposals according to the criteria stipulated in the tender booklet.

  • 8- The Ministry shall announce the winning applicant - according to the notification methods specified in the tender booklet - to complete the procedures for issuing the license.

• The Ministry grants the license to the successful applicant upon fulfilling the following:

  • 1- Providing the Ministry with the necessary documents and the operational plan.
    2- Paying the financial fee for issuing the license.
    3- Obtaining the necessary approvals and permits from the relevant authorities related to the gas network activity, including the following:

    • A- Commercial Register.
      B- License from the Ministry of Investment if the investment is foreign or joint.
      C- Approval from the General Directorate of Civil Defense, or its equivalent.

• The licensee, when wishing to renew the license, must comply with the following:

  • 1- Submit a request to the Ministry for approval to renew the license, fulfilling the requirements of the granting conditions referred to in Article (Five) of this Regulation within the period preceding its expiration by (36) months for the activity of establishing a dry gas distribution network, and (12) months for the activity of establishing an independent gas distribution network.
    2- Pay any financial fines recorded against the licensee, if any.
    3- Pay the financial fee for renewing the license.

• The licensee, when wishing to amend the license, must comply with the following:

  • 1- Submit to the Ministry a request for approval to amend the license, including the reasons and justifications for the request.
    2- Not to violate any aspects of the gas network activity.
    3- Pay any financial fines recorded against the licensee, if any.

• The licensee, when wishing to transfer the license, must comply with the following:

  • 1- Submit a request to the Ministry for approval to transfer the license, including the reasons and justifications for the request.
    2- Fulfill the requirements of the license granting conditions referred to in Article (Five) of this Regulation.
    3- Not to prejudice any aspect of the gas network activity.
    4- Pay any financial fines recorded against the licensee, if any.

The financial consideration for issuing or renewing the license shall be (20,000) twenty thousand Saudi Riyals for the activity of establishing a dry gas distribution network for a period of (15) fifteen years, and (5,000) five thousand Saudi Riyals for the activity of establishing an independent gas distribution network for a period of (5) five years, payable once before granting the license or upon its renewal.