India to set up gas exchange to ease shift from oil: Prime Minister Modi

India is working to establish a natural gas trading exchange, Prime Minister Narendra Modi said last week, as part of a shift away from a reliance on crude oil based products which are blamed for much of the country’s pollution problem.

“We want to increase the use of natural gas by 2.5 times by the end of next decade,” Modi said in New Delhi at the laying of a foundation stone for the setting up of city gas distribution (CGD) networks in 129 districts which have been auctioned.

India wants to develop a transparent market for natural gas where the price is determined on an exchange and aims to increase the use of natural gas in India’s total energy mix from 6.5 percent to 15 percent between 2028 and 2030.

The Prime Minister admitted that it is still hard to persuade people to switch to piped gas as LPG cylinders are well entrenched in India and the refuelling infrastructure for natural gas is minimal.

Modi also said India had begun the bidding process for a tenth round of CGD which will mean 400 districts or 70 percent of the country’s population is covered in the next two to three years.

He said India is spending 130 billion rupees ($1.84 billion) to set up a pipeline that will connect eastern India where there is latent gas demand which has not been tapped because of a lack of infrastructure.

The pipeline network, along with liquefied natural gas (LNG) terminals being set up in the east coast and a CGD network are expected to help boost gas consumption.

India’s oil ministry has asked its arm Oil Industry Development Board (OIDB) to engage a consultant for setting up the country’s first gas trading exchange, petroleum minister Dharmendra Pradhan said.

India’s ambitious plan to build a natural gas trading hub is aimed at enabling better price discovery for domestic as well as imported gas, with the ultimate objective of becoming Asia’s gas pricing hub.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

Leave a Reply

Your email address will not be published. Required fields are marked *