IGX seeks PNGRB approval for term-ahead gas contracts beyond one month

Currently, IGX provides day-ahead contracts and five term-ahead contracts.

Indian Gas Exchange (IGX) on March 18 applied Petroleum and Natural Gas Regulatory Board (PNGRB) for the introduction of term-ahead natural gas contracts beyond a month.

The gas exchange has sought approval for the introduction of three-month, six-month, and 12-month or yearly contracts.

Currently, IGX provides day-ahead contracts and five term-ahead contracts including daily, weekday, weekly, fortnightly and monthly.

“In recent times it has been observed that buyers specifically marketers, CGDs, and industries are preferring short to mid-term contracts of ranging from a fortnight to 1-3 year as these provide much more flexibility to buyers and do not require them to be bound in long term contracts with take or pay liability,” said IGX in a letter to PNGRB.

The company added that the exchange has witnessed higher participation in fortnightly and monthly contracts as compared to other contracts, indicating buyers’ need for relatively longer-duration contracts. It added that introducing term-ahead contracts beyond a month will provide an additional avenue for buyers and sellers to participate in the market.

The company has also sought approval for amendments proposed in approved market rules of IGX for incorporating the introduction of said contracts.