IGX to bring transparency to India's gas pricing
Three pricing nodes: Dahej, Hazira, Oduru
Singapore — India launched its first natural gas trading exchange June 15, a move which government officials expect will bring more price transparency to the market and aid in boosting consumption of the clean fuel.
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Register NowThe trading exchange for physical delivery of gas was launched by IGX, a wholly owned subsidiary of Indian Energy Exchange, or IEX.
The development of the gas hub would be a step towards the governments bold ambition of gas accounting for 15% of India's energy mix by 2030. The current share of gas in the overall energy mix stands at around 6% in India, far short than 23.5% global gas share in the energy mix.
Market determined gas prices on IGX's platform is expected to make Indian gas pricing more transparent, efficient and competitive, Indian government officials said at IGX's launch event June 15.
"PNGRB has been working on regulations to provide full access to pipelines, reforming pipeline tariffs and other steps to facilitate a gas trading hub in the country," DK Saraf, Chairman of India's Petroleum and Natural Gas Regulation Board said.
"The government of India is taking steps to move Indian gas pricing closer to market based prices and the inauguration of IGX will be a new chapter in India's market based gas pricing mechanism," Dharmendra Pradhan, Minister of Petroleum of Natural Gas and Minister of Steel said.
For the first phase of the launch there will be three pricing nodes, with ex-terminal prices at two of India's busiest LNG terminals Dahej and Hazira in Gujarat on the west coast of India along with domestic gas price in Oduru, Andhra Pradesh on the east coast.
India's gas consumption is estimated to be split evenly between domestic gas production and LNG imports. However, a large portion of the gas which is allowed to be marketed freely in the country is RLNG or re-gasified LNG. India's domestic gas production from wells under the Administered Pricing Mechanism is sold at fix price set by India's Petroleum Planning and Analysis Cell on a half yearly basis.
Prices for LNG cargoes delivered to the west coast of India is currently benchmarked against the Platts West India Marker or WIM. From its east coast non-APM gas, ONGC has awarded two tenders for a total gas supply of 650,000 cu m/day ex-Oduru linking it to the Platts WIM.
IGX's gas trading platform for compulsory physical delivery of gas would be settled on the basis of non-transferable traded contracts. The platform offers six market products – day-ahead, daily, weekly, weekdays, fortnightly, and monthly.
The trading basis would be ex-hub transactions in which transmission capacity booking would be handled by the buyer or seller and for delivered basis the transmission capacity booking will be managed by IGX.
The minimum lot size would be 100 MMBtu and transactions would take place in Rupees/MMBtu.
IEX has previously launched a similar platform for physical delivery of electricity, Renewable Energy Certificates and Energy Saving Certificates.
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IGX launches India's first gas trading exchange - S&P Global
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