Indian Gas Exchange (IGX) traded 4.92 million mBtu (million British thermal units), or around 124 million standard cubic meters (MSCM), natural gas in May 2024, a growth of 99 per cent m-o-m and a whopping 480 per cent y-o-y, largely driven by higher gas demand from the power sector.

“Trade volumes were high, mainly due to an increase in gas demand from gas-based power plants amid hot weather and directives from the government to maximise their output to address the growing demand for electricity,” IGX said.

A total of 96 trades were executed in May. During the month, 32 trades (maximum number) were executed in the monthly contracts, followed by 29 trades in daily contracts and 19 trades in weekly contracts, it added.

GIXI (Gas Index of India) for May 2024 was ₹851, or $10.2 per mBtu, higher by 13 per cent from last month. The spot gas benchmark prices recorded at Henry Hub was around $2.1 per mBtu and TTF (around $10 per mBtu). The LNG benchmark indices, West India Marker (WIM) stood at around $11.3 per mBtu.

The power sector was the third highest consumer at the exchange in FY24 at 7 per cent share, with city gas distribution (CGD) and refineries accounting for 27 per cent and 11 per cent, respectively. Sources said that power sector’s share is likely to surpass 10 per cent in FY25.

Higher volumes

Trading volumes were the fourth highest on record in last 12 months, ending May 2024. IGX registered a record trade of 11.35 million mBtu natural gas in August 2023 propelled by an increase in spot buying interest from marketers due to competitive prices in exchange against gas prices globally.

GIXI for August 2023 was around $10.6 per mBtu and spot price was around $12.5. Additionally, the spike in volumes was also due to domestic gas auctions (HPHT Gas) for two forward months, out of total volume traded around 90 per cent was high pressure, high temperature (HPHT) gas, industry sources said

February 2024 was the second highest for the 12-month period at 6.14 million mBtu, driven by CGD companies as spot gas prices were cheaper than their long-term contract gas. The companies also traded R-LNG in 4-5 monthly contracts at fixed spot price. APM gas allocation also reduced to 75-80 per cent, they added.

The volume of 5.39 million mBtu in September 2023 was the third highest and was primarily driven by the CGD sector, as the long-term Brent-linked prices were high ($12.5 per mBtu) when compared to GIXI (around $11.4). Additionally, the APM allocation was also getting reduced. The major reason for spike in volumes was due to domestic gas auction (HPHT Gas) held in September, out of total volume traded around 84 per cent was HPHT Gas.

In FY24, free market gas trade on the IGX touched a record 17.5 million mBtu, a growth of 20 per cent y-o-y. However, the total trading volume of 41 million mBtu was lower 20 per cent y-o-y mainly due to decline in sale by domestic gas producers and its resale by marketers.

Power sector

Gas-based power plants have an installed capacity of 24.8 gigawatts (GW) and account for around 2-3 per cent of India’s total power generation.

The plant load factor (PLF), or capacity utilisation, of gas-based power plants rose to 21.4 per cent in April 2024, a four year high for the month. The PLF for May 2024 is awaited.

In FY24, the PLF of gas-based plants rose to 14.8 per cent from 11.5 per cent in FY23. They produced 31.30 BU against a target of 32 BU, cumulatively consuming 235.78 MSCMD natural gas.

International Energy Agency projects India’s gas demand to grow 7 per cent y-o-y in 2024 calendar year, while Gas Exporting Countries Forum (GCEF) predicts usage to grow at 6 per cent y-o-y. Higher gas consumption for power generation is among the reasons fuelling the growth.