India launched its first natural gas exchange earlier this week. The Indian Gas Exchange (IGX) is a countrywide online gas trading platform for the delivery of natural gas, News reported.
A wholly-owned subsidiary of IEX — India's Energy Market Platform — IGX would enable participants to exchange in structured gas contracts. The exchange arrives with a web interface which is completely automated to provide a smooth trading experience.
The new exchange would enable buyers and sellers of natural gas to trade both on the spot market as well as in the forward market for imported natural gas through three hubs — Dahej and Hazira in Gujarat Province and Kakinada in Andhra Pradesh Province in southern India, the reports said.
Imported liquefied natural gas (LNG) will be regasified and sold to buyers through exchanges, eliminating the need for buyers and sellers to find each other.
In addition, the exchange will also allow shorter delivery contracts on the next day and up to 30 days. Contracts for the supply of natural gas are usually as long as six months to one year. This, experts claim, would offer buyers and sellers greater versatility.
Inaugurating the exchange, Dharmendra Pradhan, India's Minister of Petroleum and Natural Gas and Steel, said the new trading platform was one of the biggest indicators of the Indian govt's "progressive policy" as it accomplished the total energy value chain of multi-source gas production and imports of LNG from different parts of the globe to have a transparent price mechanism.
According to Pradhan, India will step closer to achieving its vision of mega-investment in liquefied natural gas terminals, gas pipes, CGD infrastructure and permission for a market-driven price mechanism, reports said.
India's gas output has been decreasing over the last two fiscal years as new natural gas supplies have become less productive. Domestic natural gas currently accounts for less than half of India's natural gas demand, although LNG imports account for the other half.
Experts claim that LNG imports are expected to become a greater proportion of domestic gas usage as India shifts from 6.2 per cent in 2018 to 15 per cent by 2030 to raise the proportion of natural gas in the energy basket.