India’s first nationwide online delivery-based natural gas trading platform, “Indian Gas Exchange (IGX)” has been launched by Union Petroleum and Natural Gas Minister Dharmendra Pradhan during an e-ceremony (virtual). It has been launched on the lines of Prime Minister Narendra Modi’s vision to provide clean, affordable, sustainable and equitable supply of energy to every citizen.
- Notably, IGX will work as a wholly owned subsidiary of the India Energy Exchange (IEX), which is India’s energy market platform.
- Headquartered in New Delhi, IGX is headed by Rajiv Srivastava as its Director.
IGX, a fully automated web-based interface provides seamless trading experience to the customers, and also enables market participants to trade in standardised gas contracts.
- It should be noted that in 2018, Petroleum and Natural Gas Regulatory Board (PNGRB), India’s downstream oil and gas regulator, has appointed ratings agency CRISIL as consultant to prepare regulations for the planned IGX and also worked with Oil Industry Development Board (OIDB) for operations.
Working of IGX; Allows short term Contract
IGX will offer six market products day-ahead, daily, weekly, weekdays, fortnightly and monthly. It allows buyers and sellers of natural gas to trade both in the spot market and in the forward market for imported natural gas. Initially, trading is proposed to commence at the physical hubs at Hazira and Dahej in Gujarat and Oduru/Kakinada in Andhra Pradesh. LNG will be regassified and sold to buyers through the exchange, removing the requirement for buyers and sellers to find each other.
- The exchange also allows much shorter contracts – for delivery on the next day, and up to a month – while ordinarily contracts for natural gas supply are as long as six months to a year. Currently short-term gas agreements are non-existent in the Indian market.
- The competitive price discovery will facilitate availability of gas at lower prices, without any government interference.
Point to be noted: As of now, the price of domestically produced natural gas is decided by the government. It will not be sold on the gas exchange.
GAIL, Petronet join India’s first gas trading platform
Recently, Liquefied natural gas (LNG) terminal owners, state-run Gas Authority of India Limited (GAIL) and Petronet LNG Ltd (PLL), have joined India’s first natural gas exchange.
- IGX already has members and clients through a membership drive which was launched in March 2020. They are Geeta Power, GMR Group, Piramal Glass, Asahi Glass, Gujarat State Fertilizers & Chemicals Ltd (GSFC), Gujarat Narmada Valley Fertilizers & Chemicals (GNFC), Krishak Bharati Cooperative Ltd (KRIBHCO), Saint Gobain, Kajaria Ceramics, Bhagyanagar Gas, Maharashtra Natural Gas Ltd (MNGL), Haryana City Gas, and Gujarat Borosil.
Note – Manikaran Power becomes the first member of India’s gas trading platform.
Efforts being taken to make India a gas-based economy; Target to raise natural gas share to 15% from 6%
Currently, Gas accounts for around 6.2% of India’s primary energy mix against the global average of 24%. In this regard, the government has set the target to raise the share of natural gas to 15% by 2030 from the current 6%. Following are the efforts being taken for the same:
- Indian gas market has multiple price bands for assets including pre-NELP, New Exploration Licensing Policy (NELP), High Temperature and High pressure (HTHP) and Deepwater and Ultra Deep Water blocks.
- India will soon have 50 Million Metric Tonnes (MMT) Liquefied natural gas (LNG) terminal capacity, and will have more than 30,000km of pipeline in next few years.
- Ongoing projects: Urja Ganga, Eastern India grid, Indradhanush project in the North-east, Dhamra-Dahej pipeline, coal gasification and CBM policy.
Chairman– Dinesh Kumar Sarraf
Headquarter– New Delhi
Managing Director and Chief Executive Officer (CEO)– Rajiv Srivastava
Headquarter– New Delhi