IGX in advanced stage of receiving regulatory nod for launch of long-term contracts

Moneycontrol had reported in July 2024 that PNGRB had flagged concerns over the launch of long-term contracts by IGX

Indian Gas Exchange (IGX) is in advanced stage of receiving government’s approval for the launch of long-term contracts on its platform, said MD & CEO Rajesh Mediratta on January 10.

The comments by the gas exchange head comes after a noticeable delay in getting the said approvals as IGX was earlier expecting government’s nod for the launch of long-term contracts by May 2024.

IGX, which is the first gas exchange in India, had applied for Petroleum and Natural Gas Regulatory Board (PNGRB) approval in March 2024 for introduction of three-month, six-month, and 12-month or yearly contracts on the trading platform.

Mediratta, however, informed reporters that IGX is going ahead with three-month and six-month contract for now, before launching yearly contracts, to evaluate market response.

Currently, IGX provides day-ahead contracts and five term-ahead contracts including daily, weekday, weekly, fortnightly and monthly. Longer term contracts are expected to significantly boost the volumes that are traded on the exchange.

Promoted by the Indian Energy Exchange (IEX) and NSE, IGX allows multiple buyers and sellers to trade in spot and forward contracts at designated delivery points. The gas exchange's strategic investors include GAIL (India), Indian Oil, ONGC, Adani Gas and Torrent Gas.

Moneycontrol had reported in July 2024 that PNGRB had flagged concerns over the launch of long-term contracts by IGX for not sufficiently addressing risks related to defaults by sellers or buyers. Mediratta said that company has now addressed the concerns and is expecting PNGRB approval soon.

Collaboration for green gas trading

IGX signed a memorandum of understanding (MoU) with Austria’s Central European Gas Hub AG (CEGH) on January 10 to explore collaborative opportunities in natural gas and renewable gases trading.

The company said the partnership is aimed to strengthen India’s gas market by leveraging CEGH’s European market expertise and IGX’s deep-expertise in the domestic gas market. The key focus of the MoU include trading of natural gas and renewable gases like hydrogen, biomethane, and e-methane, commodity-related certificates, market development, training programs and gas-hub operations.

“A key objective of the partnership is to collaborate on best practices for the operations of natural gas trading focusing on enhancing the technical, operational and regulatory capabilities. Insights from the Indian and European gas markets will be utilized and international best practice will be shared, facilitating the creation of a liquid and transparent gas market,” IGX said in a press release.

IGX and CEGH also plan to explore the development of trading platforms for emerging green gases like hydrogen, biomethane and would also work together to support gas hub operations in India.

With rising energy demand in the country, India has set an ambitious target of increasing the share of natural gas in the total energy mix to 15 percent by 2030 from the current six percent.