The Indian Gas Exchange Ltd. or IGX is planning to start trade in liquefied natural gas from October, to help last-mile areas unconnected with pipelines get access to natural gas.
The exchange had been trading in re-gassified natural gas till now. But, going ahead, liquid gas will be arranged at terminals, which buyers can take in LNG tankers to far-away locations (200-300 km) that are not yet connected with pipelines, Rajesh Kumar Mediratta, managing director of IGX, told BQ Prime.
“IGX can also supply the gas to the buyers in tankers that we have tied up with the logistics companies for. The liquid gas will have to be re-gassified at the point of delivery,” Mediratta said.
The minimum capacity that can be supplied will be 400 million metric British thermal unit, Mediratta said. A tanker has a capacity of up to 800 mmBtu, he said.
“We are in talks with all the stakeholders such as the buyers, sellers and the terminal operators. Terminal operators have also provided us with the space where buyers can park their tankers and take the LNG.”
The exchange will now file an application to the Petroleum and Natural Gas Regulatory Board for the final approval.
“We hope to start the LNG trade from the next quarter (Q3 FY23),” Mediratta said. “We aim to have 10-12% of the spot market share of natural gas on the exchanges over the next 2-3 years. This would equal to around 5 million standard cubic meter per day of gas.”
The exchange traded around 2.1 mmscmd of gas on the exchange in August, which was a 30% increase over July, he said.
Natural Gas Demand
The exchange expects the demand for natural gas to pick up in the next 2-3 years as the city gas distribution networks, that were awarded in the 10th and 11th round of the PNGRB auction, would get commissioned.
Besides, India wants to increase its natural gas usage in the total energy mix to 15% by 2030 from 6.5% at present.
The company expects major demand to come from CGD companies as they increase their compressed natural gas, piped natural gas and commercial and industrial networks.
“Demand is also expected from fertiliser companies, while many other industries that have switched to furnace oil or propane as gas substitute due to increase in LNG prices are expected to come back to the fold in the next one year,” he said..
India’s spot market trade of natural gas is close to 45-50 mmscmd of the total 150-160 mmscmd that India consumes.
Domestic Gas On IGX For First Time
For the first time, domestic oil and gas explorers and producers such as Oil and Natural Gas Corp. Ltd. and Reliance Industries Ltd. have also started selling or plan to sell natural gas on the IGX.
The gas is from high pressure, high temperature fields, which will fetch companies the market price unlike the administered price mechanism gas that is allocated to domestic companies based on half-yearly price derived by the government.
ONGC sold close to 0.6 mmscmd of gas on IGX in August from its new Krishna Godavari Basin field, Mediratta said.
RIL, too, is planning to bring its coal-bed methane gas to the exchange from next month. The gas is from its Shahdol CBM block. “The quantity is likely to be 0.1-0.2 mmscmd to begin with,” Mediratta said.