Indian Gas Exchange trades a record 10.3 lakh mBtu in October 2021

Indian Gas Exchange (IGX) achieved a record trading of 10.3 lakh million British thermal units (mBtu) of gas volumes in October, with the platform discovering prices lower than spot Asian liquefied natural gas (LNG) rates. Most of the trading was done through monthly contracts, which recorded transactions of 9.4 lakh mBTu in October. The monthly trade volume in October was more than the 7.7 lakh mBtu of gas traded in the first six months of the ongoing fiscal.

The average price of monthly contracts in October discovered in the spot market was $27.6/mBtu, while Asian spot LNG rates ranged between $30-35/mBtu throughout the month.

“Better price discovery than global spot markets have attracted buyers to the exchange, and now we have many new buyers and sellers in IGX,” Rajesh Kumar Mediratta, MD and CEO of IGX told Financial Express.

The Union petroleum and natural gas ministry’s decision in August to allow domestic gas producers (with marketing freedom) sell 10% of their annual production through gas exchanges may have also contributed to higher trade volumes in IGX. The decision has paved way for Reliance Industries (RIL) and BP to sell a part of the output from the ultra-deep-water field in the KG-D6 Block in IGX. Oil and Natural Gas Corporation Ltd (ONGC) can also sell some gas in the exchange from its U1B deep-water gas located in KG-DWN 98/2 block.

The country’s maiden gas trading platform was launched in June 2020 to provide more flexibility to users by providing them more options to book the fuel on short term contracts. Though more than 80% of the imports are carried out under long-term contracts at predetermined prices, a significant portion of buyers is vulnerable to the rise recorded in global spot prices. In the first six months of FY22, 15,678 million standard cubic meters of LNG was imported which catered to 49% of domestic demand. Demand for natural gas in the domestic market is traditionally dependent on the fertiliser, city gas distribution entities, power, refineries and petrochemicals industries.

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