India To Launch Gas Trading Hub
The government plans to launch a natural gas trading hub, creating an Indian gas benchmark which will spark a surge in consumption of the cleaner burning fuel. Petroleum and Natural Gas Regulatory Board (PNGRB) has also sought bids to hire a consultant to help develop a regulatory framework for operationalising the gas hub.
This is to further boost the consumption of natural gas in the country, where natural gas can be traded and supplied through a market based mechanism instead of multiple formula driven prices, which in turn will boost the share of natural gas in India’s energy mix to 15% by 2030, from over 6% now. The planned gas hub would have to be located near India’s main gas pipeline networks, most likely in the states of Gujarat, Maharashtra or Andhra Pradesh, where more advanced infrastructure is located. Currently, India imports gas from various sources. June saw the first cargo of Russian liquefied natural gas, from Gazprom, reach its shores (cheapest LNG).
Analysts see India’s morphing into a gas-hub as a slow process. As India lacks some of the underlying regulation in how the market works and making sure there’s good thirdparty access and competition. The Shanghai gas exchange is a caution in this respect, that has a lot of different contracts, and yet, no one is quite sure what they mean and who is trading them. And there is a possibility that India could go down the same route.