The UAE's Legal Framework for LPG Trading and Regulation
Energy and Resources / UAE
Yanal Abul FailatSenior Counsel,Corporate Commercial
Liquefied petroleum gas (“LPG”) is a fuel gas composed of a flammable mixture of hydrocarbon gases, primarily including propane, propylene, butylene, isobutane, and n-butane. LPG is produced by refining petroleum or “wet” natural gas and is predominantly derived from fossil fuel sources, either as a byproduct of petroleum refining or through extraction from petroleum or natural gas streams as they are processed.
LPG offers several benefits, such as high calorific value, low emissions, and ease of transportation and storage, making it a versatile, clean-burning fuel widely used in the United Arab Emirates (“UAE”) across domestic, industrial, and commercial sectors. The UAE is a leading global producer and consumer of LPG, and the industry plays a crucial role in the country’s energy sector, supporting its sustainability and economic diversification goals. Due to its clean and efficient characteristics, LPG is a favourable alternative to other fossil fuels.
However, the safe use, storage, and distribution of LPG pose challenges due to the inherent risks, such as fire hazards and environmental impacts. The UAE has developed a comprehensive legal and regulatory framework to govern the trading, storage, and distribution of LPG. This framework aims to ensure safety, sustainability, and competitiveness in the market, while addressing the potential risks associated with the use of this vital energy resource.
This article provides a high-level overview of the legal and regulatory framework governing LPG in the UAE, focusing on the federal framework and emirate-level regulations. It outlines the legal obligations, licensing requirements, technical standards, and potential penalties for non-compliance within the LPG sector.
The primary legal framework for LPG regulation in the UAE is Federal Law No. 14 of 2017 on Trading Petroleum Products (the “2017 Trading Law”). This law governs the trading of all petroleum products, including LPG, and establishes the foundation for ensuring the safety,
environmental protection, and competitiveness of the UAE’s petroleum products market. It applies across the entire UAE, encompassing mainland areas, free zones, special development zones, and investment zones, unless otherwise exempted by Cabinet decision.
The 2017 Trading Law defines “trading” as including the introduction, sale, storage, transportation, marketing, distribution, and offering for sale of petroleum products. These products include hydrocarbon gases such as LPG, which consists of propane, butane, and other gaseous hydrocarbons.
In addition to regulating LPG trading, the 2017 Trading Law grants each emirate the authority to determine the specific petroleum products that may be traded within its jurisdiction. The law aims to ensure the protection of the national economy, safeguard public health and safety, and protect the environment by regulating the activities of traders and preventing any practices that could harm the UAE’s interests.
The Cabinet Resolution No. 35 of 2019 Concerning the Executive Regulations of Federal Law No. 14 of 2017 on Petroleum Products Trading (the “2019 Executive Regulations”) serves as the secondary legislation that supplements the 2017 Trading Law. It provides specific guidelines on the implementation of the 2017 Trading Law, such as establishing registers for licensed traders, detailing the responsibilities of these traders, and outlining penalties for non-compliance.
The 2019 Executive Regulations mandate the formation of a petroleum products trading regulatory committee in each emirate, responsible for overseeing trading activities. The regulations also grant the competent authority in each emirate the right to reconcile with violators before referring cases to the courts. Traders who breach the provisions of the 2017 Trading Law may appeal any decisions, actions, or measures, though reconciliation decisions are final and binding.
Further clarity on the unified regulatory processes governing petroleum product trading, including LPG, is provided by Ministerial Decision No. 61 of 2020 on the Unified Regulatory Procedures for Trading in Petroleum (the “2020 Ministerial Resolution”). This resolution standardises regulatory procedures across all emirates, ensuring a consistent approach to licensing, environmental compliance, and safety standards.
The 2017 Trading Law, the 2019 Executive Regulations, and the 2020 Ministerial Resolution collectively form the core of the UAE’s regulatory framework for LPG trading. These laws govern licensing, registration, technical safety, environmental standards, and penalties for violations in the LPG sector.
Key Licences Required for LPG Trading To operate within the LPG sector in the UAE, companies are required to obtain several key licences and permits. The specific licences required may differ slightly between emirates, but the overarching regulatory requirements remain consistent across the country. Key licences include:
Trading Permit: Issued by the competent authority in each emirate, this permit authorises the holder to engage in the trading of LPG.
Trading Licence: This licence is required for any company involved in economic activities related to LPG trading.
Transportation Licence: Entities transporting LPG between emirates must obtain a special permit authorising the safe transport of LPG in compliance with regulatory standards.
Storage and Handling Permit: A permit is required for the storage or handling of LPG, ensuring that facilities meet safety and environmental requirements.
Conditions and Procedures for Obtaining Licences The procedures for obtaining these licences and permits typically involve meeting a range of technical, safety, and environmental standards. These conditions include:
Nationality and Legal Status Requirements: Companies applying for an LPG trading licence must be UAE citizens or UAE-based legal entities with at least 51% UAE ownership.
Facility, Equipment, and Certification Requirements: LPG facilities must meet stringent technical and engineering standards, including compliance with health, safety, and environmental regulations.
Environmental, Security, Health, and Safety Requirements: Applicants must adhere to standards set by the Ministry of Industry and Technology (“MoIAT”), the Ministry of Energy and Infrastructure, and the Ministry of Climate Change and Environment. These standards ensure that the handling and distribution of LPG comply with UAE environmental protection laws.
Application Process: Businesses must submit their applications to the competent authority in their respective emirate, along with the necessary documentation and fees. A committee, established under the 2019 Executive Regulations, reviews the applications, conducts inspections of the facilities, and ultimately determines whether the licence is granted.
Safety Standards and Environmental Obligations LPG companies in the UAE are required to comply with a comprehensive set of safety standards, environmental obligations, and technical regulations. Among the key legal provisions governing LPG safety and environmental compliance are:
Federal Law No. 24 of 1999 on Environmental Protection and Development: This law mandates strict adherence to environmental protection measures, especially in the handling, storage, and transportation of hazardous materials such as LPG. The law is instrumental in regulating emissions, waste disposal, and environmental sustainability in the LPG sector.
MoIAT Technical Regulations: These regulations set detailed requirements for the design, performance, testing, and marking of LPG cylinders and other equipment. Compliance with these regulations is mandatory, and failure to meet these standards can result in significant penalties.
Cabinet Resolution No. 11 of 2011 on Approving an Emirati Regulation on the Application of UAE Standards and Mandatory Requirements for Liquefied Petroleum Gas Cylinders and Accessories: This resolution outlines the technical standards that LPG cylinders and accessories must meet to be sold or used in the UAE. It mandates the use of high-quality materials, protection against corrosion, and the ability to withstand local environmental conditions.
Additionally, under the 2020 Ministerial Resolution, specific requirements for LPG traders include:
Manufacture: Companies must secure various certificates from the Directorate General of Civil Defence and environmental authorities, ensuring safety and compliance.
Importing: Traders must obtain compliance certificates and trading authorisations from relevant authorities.
Storage and Transport: Companies need certificates of no objection for safety, environmental, and transport standards from the Directorate General of Civil Defence and other relevant bodies.
Penalties for Non-ComplianceNon-compliance with the UAE’s LPG regulations can result in severe penalties, including:
Fines and Imprisonment: Violations of the 2017 Trading Law or the 2019 Executive Regulations may result in fines ranging from AED 100,000 to AED 500,000, with imprisonment of up to one year for serious infractions. Repeat offenders face harsher penalties.
Confiscation of Goods and Equipment: Regulatory authorities have the power to confiscate non-compliant LPG products, vehicles, and equipment.
Reconciliation and Appeals: In some cases, violators can settle penalties by paying fines prior to court referral. However, the 2019 Executive Regulations limit the right to appeal reconciliation decisions.
The UAE is a leading global producer and consumer of LPG, and the industry plays a crucial role in the country’s energy sector, supporting its sustainability and economic diversification goals. Due to its clean and efficient characteristics, LPG is a favourable alternative to other fossil fuels.
LPG products in the UAE must comply with a wide range of technical standards designed to ensure product safety, quality, and environmental sustainability. These standards are defined in several key pieces of legislation.
The Cabinet Resolution No. 11 of 2011 on the Mandatory Requirements of Liquefied Petroleum Gas Cylinders and Accessories (“Cabinet Resolution No. 11 of 2011”) sets out the technical specifications for LPG cylinders and accessories. It mandates that all gas cylinders sold in the UAE must meet stringent standards for safety, durability, and quality. Cylinders must undergo rigorous testing to ensure they can withstand high pressure, temperature fluctuations, and other environmental factors prevalent in the UAE.
Key requirements under this resolution include:
Valve Protection: Cylinders must have robust mechanisms to protect valves from damage.
Durability: LPG cylinders must be made from materials that are resistant to corrosion and wear, ensuring longevity and safety.
Marking and Labelling: Each cylinder must be clearly marked with information on the manufacturer, country of origin, capacity, gas type, test pressure, and other essential safety information.
Federal Decree by Law No. 20 of 2020 Concerning Specifications and Standards (the “2020 SS Law”) imposes further obligations on manufacturers and suppliers of LPG products to comply with UAE standards. This law gives MoIAT the authority to prepare, review, and amend standard specifications in coordination with other government bodies. MoIAT is also responsible for enforcing technical standards and issuing certificates of conformity.
Under the 2020 SS Law, LPG cylinders and accessories must be inspected and re-certified every five years for steel and aluminium cylinders and every seven years for composite cylinders. Non-compliant products may be confiscated, and violators may face substantial penalties, including fines, imprisonment, or the revocation of trading licences.
The legal framework for LPG trading and regulation is supplemented by emirate-specific rules and regulatory bodies that enforce the federal framework. Below is an overview of the regulatory systems in key emirates.
Abu Dhabi In Abu Dhabi, the Abu Dhabi Department of Energy (“ADDoE”) is the competent authority designated to oversee LPG trading. While Abu Dhabi’s regulatory system is still evolving, the Abu Dhabi Law No. 5 of 2023 Regulating the Trade of Petroleum Substances in the Emirate of Abu Dhabi has formally designated the ADDoE as the competent authority. A petroleum products trading regulatory committee has also been established under the 2019 Executive Regulations.
Abu Dhabi is currently developing a comprehensive technical permitting system for the storage, transportation, and sale of LPG. This system is expected to become fully operational by 2025. Until then, businesses must work closely with the ADDoE to obtain the necessary permits and licences.
On 31 August 2023, the Gas Safety Committee, formed by ADDoE, issued three key circulars to enhance LPG safety:
Prohibition on Non-National LPG Supply: Only LPG from UAE national petroleum companies can be sold, with penalties for violations, including fines and business closures.
Retail Sale of Gas Cylinders: Retail outlets are banned from selling gas cylinders, with fines starting at AED 3,000.
Central Gas Systems: Buildings must switch to central LPG systems, with mandatory maintenance contracts and a compliance deadline by the end of 2023.
Dubai Dubai has one of the most advanced LPG regulatory systems in the UAE. The Dubai Supreme Council of Energy (“DSCoE”) is the sole authority for issuing and renewing trading permits, requiring full compliance with all relevant approvals from Dubai’s government entities under Directive No. 3 of 2021 on the Regulation of LPG Trading. This directive mandates high safety and environmental standards, particularly in the areas of transportation, storage, and distribution of LPG. Only DSCoE-approved LPG cylinders filled at authorised factories are permitted for distribution. Joint inspections with other government bodies are conducted to ensure compliance. Through Resolution No. 1 of 2022, enforcement has been strengthened, leading to penalties for non-compliant traders and promoting public safety.
The DSCoE works closely with other governmental bodies to ensure compliance with technical standards, and it regularly conducts joint inspection campaigns to enforce regulations. Dubai’s regulatory framework for LPG is highly structured and incorporates a wide range of health, safety, and environmental standards.
Sharjah In Sharjah, the Sharjah Economic Development Department acts as the de facto competent authority. While the emirate has not fully implemented the 2017 Trading Law, LPG trading activities are currently restricted to state-owned participants, noting that existing private traders operate under renewable licences, but no new licences are being issued at this time.
Fujairah The Fujairah Oil Industry Zone Authority is the competent authority overseeing LPG regulation in Fujairah. Although the emirate’s regulatory framework is still in its early stages, FOIZA has begun to issue licences to larger corporations, with plans to expand these efforts to smaller companies in the near future. FOIZA has also established a publicly accessible register of LPG traders, ensuring greater transparency in the regulatory process.
Other Emirates In Ajman, Ras Al Khaimah, and Umm Al Quwain, LPG regulation is largely ad-hoc, with no comprehensive local legal instruments supplementing the 2017 Trading Law. Ajman’s Petroleum and Metals Department and Ras Al Khaimah’s Petroleum Authority act as the competent authorities in their respective emirates, while Umm Al Quwain relies on its Department of Economic Development to manage LPG trading activities. In all three emirates, regulations are implemented reactively, with licences issued on a case-by-case basis.
The legal and regulatory landscape for LPG in the UAE is robust and evolving, shaped by both federal laws and emirate-specific regulations. Federal laws like the 2017 Trading Law and the 2020 Ministerial Resolution provide a solid foundation for governing the LPG sector, ensuring safety, environmental protection, and market competitiveness. However, the extent and enforcement of these regulations vary across the emirates, with Abu Dhabi and Dubai leading in terms of structured and stringent oversight.
For LPG traders, the regulatory environment requires strict compliance with safety, environmental, and technical standards alongside a multi-layered licensing process. The penalties for non-compliance are significant, underscoring the UAE’s commitment to maintaining a safe and sustainable LPG market. Meanwhile, consumers benefit from these high standards, which ensure safer products and services while aligning with the UAE’s broader environmental and sustainability goals.
As the legal framework continues to develop, particularly with Abu Dhabi’s initiatives and Dubai’s established regulatory system, the sector is moving toward greater consistency and structure. This ongoing evolution promises to foster a more transparent, competitive, and safe environment for both industry stakeholders and consumers alike.
For further information,please contact Yanal Abul Failat.
Published in March 2025
