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Indian Gas Exchange gets nod to trade in domestic natural gas

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On August 19, 2021, the ministry of petroleum authorised domestic gas producers to sell up to 500 million standard cubic metres or 10% of annual production from contract area, whichever is higher, per year through gas exchanges.

The Indian Gas Exchange (IGX), the only gas trading platform in the country, has received the much-awaited regulatory nod to trade in domestic natural gas. The domestic gas trading will be launched on May 16, the company said.

On August 19, 2021, the ministry of petroleum authorised domestic gas producers to sell up to 500 million standard cubic metres or 10% of annual production from contract area, whichever is higher, per year through gas exchanges.

With this approval, upstream gas production of marketing and pricing freedom gas, such as from CBM,and domestic small fields, as well as marketing freedom ceiling gas (difficult fields) can now be effectively managed through flexible contracts at IGX.

Rajesh K Mediratta, managing director & CEO, IGX said, “Now, end consumers will be able to buy HPHT gas at a current ceiling price of $9.92 per mmBtu through IGX. And, for other domestic gas, where there is no ceiling price, the buyers would receive gas at a much better price in spot market.”

Mediratta added: “In addition to above, exchange flexibility, ease-of-trade, payment security and transparency will further provide encouragement and incentives to offshore and on-shore gas producers especially discovered small fields, coal bed methane producers. This development will surely help IGX to further accelerate India’s journey towards a gas-based economy.”

The exchange believes, gas producers will have immediate sales opportunity which will result in maximisation of domestic gas production and increased liquidity on the platform.

“Small buyers who currently don’t have access to domestic gas either due to their size or allocation priority can now come to the exchange and procure domestic gas at competitive prices and ultimately build a gas ecosystem,” the company said.

IGX is adding regional hubs and each regional hub will have multiple delivery points to facilitate trade of domestic gas on the exchange as per amended Gas Exchange Regulations notified on May 6, it said.

IGX recently extended the horizon of the monthly contract also from three to six months with effect from April 1.

IGX currently facilitates delivery-based trades in 6 different contracts such as Day-Ahead, Daily, Weekday, Weekly, Fortnightly and Monthly at 5 different designated physical hubs — Dahej, Hazira, Dabhol, Jaigarh and KG Basin.

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