Indian Gas Exchange plans to offer 3-6 month contracts

IGX currently allows gas suppliers to sell the fuel on the exchange for durations ranging from daily, weekly, fortnightly, and monthly.

The Indian Gas Exchange (IGX) has sought regulatory approvals to launch 3-6 month gas contracts benchmarked to international gas prices, its chief executive Rajesh Kumar Mediratta said.

IGX currently allows gas suppliers to sell the fuel on the exchange for durations ranging from daily, weekly, fortnightly, and monthly. It also offers intraday trading at a fixed price. Mediratta said the exchange has applied to the regulator, Petroleum and Natural Gas Regulatory Board (PNGRB), for permission to launch three-month and six-month delivery contracts indexed to gas benchmarks such as FIXI and Platts JKM, WIM, and Dated Brent. "We are awaiting a clearance from PNGRB," he said.

The new long-duration contracts will have a payment cycle of a fortnight compared to the current system of payments being made in 2-3 days after delivery. Additionally, IGX is looking to introduce green certificates for trading, he said, as the government looks to make the usage of 1 percent compressed biogas (CBG) mandatory for city gas sellers. "Where city gas retailers have supplies coming from CBG plants, meeting the obligation of having 1 percent CBG in the gas they supply will not be a problem. But in places where they don't have CBG supplies, they can buy these certificates," he said.

He said gas volume traded on the exchange crossed 1 billion cubic meters (4 crore million British thermal units) in the first nine months of the current fiscal year. This volume equals 4.1 crore mmBTU volumes traded in the full 2023-24 fiscal year (April 2023 to March 2024).

IGX has also signed a MoU with Austria’s Central European Gas Hub (CEGH) to explore gas trading opportunities, including those for green gases such as hydrogen and methane. "This partnership aims to strengthen India’s gas market by leveraging CEGH’s European market expertise and IGX’s deep expertise in the Indian gas market," he said.

Key focus areas 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 practices will be shared, facilitating the creation of a liquid and transparent gas market.

IGX and CEGH also plan to explore the development of trading platforms for emerging green gases like hydrogen, biomethane (including green gas certificates). Both parties will also work together to support gas hub operations in India, he said. "This partnership will enable us to co-develop innovative solutions for natural gas and renewable gas trading, strengthen market efficiency, and enhance energy security," he added.