IEX plans to launch spot gas exchange for marginal fields
The Indian Energy Exchange (IEX), the country’s largest power trading platform, is looking at launching a spot gas exchange for trading of natural gas produced by marginal fields.
Speaking to Standard, SN
Goel, managing director and chief executive officer,
IEX, said the company was in discussions with stakeholders on the proposal.
“There is a disparity in gas prices. In India, the domestic gas price is $3.5 per mmbtu, while the
LNG rate is $9 per mmbtu. If there is a market, the rate would be $7-8 per mmbtu,” he said.
Mmbtu stands for one million British thermal units (BTU), a measure of energy content in a fuel.
Goel said a higher price would help operators produce gas from the marginal fields. Since output from these fields was low, gas production did not make commercial sense at a lower rate, he added.
“There is a lot of synergy between a power and gas exchange. Business Since we are already operating a power exchange for the last 10 years, we think we are good for setting up a gas exchange,” he said.
Currently, natural gas derivatives are traded on commodity platforms such as the NCDEX. If the IEX’s plan succeeds, this will be the first spot gas market in the country.
The move comes at a time when gas-based power generation is facing a fuel crisis. Of the 24,150 megawatts (Mw) of gas grid-connected power generation capacity in the country, 14,305 Mw has no supply of domestic gas. The remaining (9,845 Mw) is working at a sub-optimal level.
The Centre recently conveyed to private power producers that natural gas would no longer be allocated, and that they would have to bid to buy the fuel.
“We are working with different stakeholders to understand what we need to do. It will be a privately owned exchange, so you might see participants like GAIL. But it is all in the discussion stage,” said Goel.