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The Indian Gas Exchange (IGX), promoted by the Indian Energy Exchange (IEX), has launched an index that will reflect gas prices and will soon come up with a product for trading in gas pipeline capacity.
The index, which IGX has named ‘GIXI’, will reflect the volume-weighted average price for all gas traded and would represent the gas prices at the Western and Southern hubs. It would help market participants know the inland gas prices and take suitable decisions, IGX’s MD and CEO, Rajesh Kumar Mediratta, told businessline.
Participants can offer to sell and buy gas (including LNG), for which IGX charges ₹4/mmBtu each from the seller and the buyer. The gas must necessarily be physically delivered and taken. The NSE is working on bringing out a product for cash-settled gas trade, for which GIXI will serve as the base — NSE will pay a fee for the use of the index, Mediratta said.
In the last two years, IGX has seen about 1,980 trades. Mediratta said the prices discovered through the exchange have been generally lower than the international prices.
Gas pipeline capacity
Asked about IGX’s plans for the coming years, Mediratta said the exchange had applied to the Petroleum and Natural Gas Regulatory Board (PNGRB) for an approval to launch trading in gas pipeline capacity. While only three companies — GAIL, GSPL and PIL — own gas pipelines, many companies often contract for pipeline capacity. Often this capacity is not fully used. In such cases, such surplus pipeline capacity can be traded on IGX.
In addition, IGX also intends to come out with a product for small capacities of gas. This means a small company can even buy a couple of truckloads of liquid gas. IGX has nine delivery points across the country, from where small quantities of gas could be lifted.
Furthermore, the exchange will come up with a one-year contract, too. At present, one can buy or sell gas for the next day, week, month or six months; but in the future, a longer period contract will be possible.
Data provided by IGX show that in the current year, up to January 2023, the exchange has traded 27.79 million mmBtu; the prices have ranged from a low of ₹1,222 to ₹2,682/mmBtu. The highest volume was in December — 7.55 million mmBtu, for ₹1,241/mmBtu.
‘Not in a hurry’
The promoter, IEX, is required to bring down its stake from 47 per cent now to 25 per cent, which is likely to happen through an IPO. Asked about this, Mediratta said there is time till 2025 and “we are not in a hurry.”
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