IEX wants to introduce trading in liquid LNG, petroleum products

M Ramesh Chennai | Updated on August 13, 2020

India’s premier energy exchange, IEX, wants to introduce trading in petroleum products, especially LNG in liquefied form.

On July 15, IEX opened a platform for trading in natural gas, mainly for imported LNG.

This was close on the heels of the exchange bringing in ‘real time market’ for trading in electricity, in June — where buyers and sellers of electricity could place bids for purchase or sale of electricity after just one hour.

Asked which other products IEX could be expected to introduce in the near term, Rajesh Kumar Mediratta, the listed company’s Director – Strategy & Regulatory Affairs, told BusinessLine that the exchange was mulling other petroleum products, especially LNG in liquefied form.

“LNG in liquid form can be traded separately,” he said. Asked how the product would be delivered (derivatives are not yet allowed), Mediratta said liquid LNG could be trucked to the buyers’ places from import terminals — it would be re-gasified at site.

The conventional way of transporting LNG is to convert the liquid gas into gaseous form at a re-gasification facility at the terminal where LNG is imported and pipe the gas to customers. However, according to Mediratta, the are other ways of handling the fuel which provides an opportunity to IEX.

Today, small, portable re-gasification units are available, he said, noting that “it is already a big business in China.” Even in India, some people have begun to use it, he said.

Kochi terminal

IEX’s gas platform saw trading of 9,600 mmBtu of gas in the first fortnight. Even though there is not much gas available for trading in the spot or short term market, much of the availability having been committed under long term contracts, the volumes could have been higher but for the closure of the Dabhol LNG terminal for the monsoons.

Mediratta said IEX was in talks with ONGC and Reliance to get them sell any ‘free gas’ (gas that is not required to be sold under government-fixed prices) through the exchange.

Asked if IEX would start trading LNG brought into the Kochi terminal, Mediratta said that Kochi could become a hub once the Kochi-Mangaluru gas pipeline was commissioned.

The pipeline was scheduled to be commissioned this month (August) but has been delayed by Covid-19. Once the pipeline came into being, industries around Mangaluru could start using gas.

Asked if the pipeline implied a jump in IEX’s business, Mediratta said that it was a big positive, but would take time because user industries would need time to shift from their conventional fuels to gas.

Published on August 13, 2020

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