IGX launches small scale LNG contracts

Indian Gas Exchange (IGX) said on Wednesday that it has launched contracts of small-scale liquefied natural gas (ssLNG) on its platform after it received approval from the Petroleum and Natural Gas Regulatory Board (PNGRB).

This move marks a significant step towards addressing the demand of natural gas in areas that are not connected to the national gas grid, the platform said.

In December last year, IGX said that it sought approval from the PNGRB for launching ssLNG trading on the exchange, which allows trading of LNG from RLNG terminals and distributed fields in ssLNG containers.

ssLNG contracts

The introduction of ssLNG contracts on IGX aims to address the growing gas demand from industries and CGD (City Gas Distribution) companies that do not have access to pipeline networks, IGX added.

Through ssLNG, they can now procure liquefied gas through LNG tankers at competitive rates under daily, fortnightly and monthly contracts. Initially, this contract is launched at Dahej and Hazira LNG terminals. Later, it will be launched at other terminals namely Dhamra, Mundra, Ennore, Kochi, and on-land ssLNG stations at Vijaipur.

IGX MD & CEO Rajesh K Mediratta said, “With demand for road-transported LNG projected to increase substantially over the coming years, our initiative will provide CGD networks, industries and LNG dispensers a competitive gas pricing that will optimise their costs. By facilitating the trading of ssLNG contracts, we are not only enabling efficient transportation of larger volumes of natural gas via trucks but also widening access to a cleaner fuel across the country.”

LNG transportation

Natural gas is primarily supplied through pipelines, as a result, industries and commercial establishments without access to the grid primarily rely on trucks for LNG transportation.

The demand for road-transported LNG is projected to increase to 5 million standard cubic meters per day (MSCMD) over the next five years. ssLNG contracts present a win-win situation for both the buyers as well as sellers. It would serve as a platform for sellers, who can come and trade LNG.

Transporting natural gas in liquefied form via trucks will allow larger volumes to be transported, potentially making it economically viable for buyers not connected to pipelines. Further, it will also ensure a transparent and fair procurement process with enhanced payment security.

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