New Delhi: The Indian Gas Exchange (IGX) is planning to launch small-scale Liquefied Natural Gas (ssLNG) contracts for the first time on its trading platform and is awaiting regulatory approval from the Petroleum and Natural Gas Regulatory Board (PNGRB), Rajesh Mediratta, MD and CEO of the company, said. Interacting with the media on the occasion of IGX’s third anniversary celebration on Wednesday, Mediratta said that the demand for LNG transported through road is expected to grow several times in the next five years. The IGX trades only natural gas so far. Commenting on the timeline for the launch, the CEO said that it is likely to be available on the platform by mid of 2024.
Mediratta said that currently only 0.7 MMSCMD of LNG is transported by road in India and this is expected to grow to 5 MMSCMD over the next five years. The small-scale contracts will allow buyers to book LNG trucks with IGX for geographical areas which do have natural gas pipeline connectivity yet. “Transporting natural gas in liquid form allows more volumes to be transported. With PNGRB’s unified tariff not linked to the price movement of natural gas, it might be cheaper for buyers to transport gas through trucks,” said the IGX CEO.
The IGX is considering starting the delivery for ssLNG contracts from Dabhol, Hazira, Dahej, Kochi and Ennore LNG terminals from where LNG will be transported in trucks via road.
The IGX MD and CEO also told reporters that the company is looking to launch long-term contracts of three months, six months and 12 months on the trading platform and has sought approval from PNGRB in this regard. For these contracts, the prices will be linked to international benchmarks like JKM, WIM and Brent.
Mediratta added that the exchange has also reached out to the government to remove the ceiling of 10 percent for producers to sell their gas on the exchange.
The gas trading platform is also looking to start cross-border trading of natural gas with Bangladesh. “That plan is in the pipeline. Around 60 percent of Bangladesh’s economy depends on gas. So, it makes sense to start cross-border trading with them. However, pipelines need to be laid. There are no pipelines. In the meanwhile, we can start transporting LNG via road. But it is a plan still in the works,” said Mediratta.
Commenting on the demand outlook, the IGX CEO said that the demand for natural gas in India will be growing year-on-year every month. In the short term, as gas-based power plants go online again to meet the peak power demand projected for 2024, the demand for gas from the power sector will be a key driver for growth in natural gas consumption, more than the fertilizer sector, said Mediretta. In addition, demand from the City Gas Distribution (CGD) sector is also expected to rise, he added.