India’s only gas exchange, IGX, which is a subsidiary of the energy exchange, IEX, will come out with an initial public offering, IEX’s Chairman and Managing Director, Satyanarayan Goel, told BusinessLine on Tuesday.
IEX, which today has 47 per cent stake in IGX, was launched on June 15, 2020, to enable trading of natural gas — either imported or the gas that is outside of price-controls.
Since its launch, IEX has sold stake in IGX to ‘strategic investors’ -- ONGC, IOC, GAIL, Torrent, Adani and NSE. “There are many investors asking for stakes, but as a matter of policy, we have given stakes to these strategic investors only,” he said.
“As per the regulations of PNGRB (Petroleum and Natural Gas Regulatory Board), we must bring down our stake to 25 per cent,” Goel said, adding that an “IPO is the most efficient mode” of doing so.
A year-and-a-half has elapsed since IGX was incepted; the company has three-and-a-half years to comply with the regulations.
Gas traded hits a high
IGX today announced that it traded 2.27 million MMBTu of gas in February; the highest single day trade, 688,500 MMBTu, happened on February 15. In 2021-22, up till February, 8.8 million MMBTu of gas has been traded over the exchange, according to a press release from IGX.
IGX facilitates delivery-based trades in six different contracts — Day-Ahead, Daily, Weekday, Weekly, Fortnightly and Monthly — at five different designated physical hubs - Dahej, Hazira, Dabhol, Jaigarh and KG Basin. Currently, the trades can be executed for three consecutive months in different contracts.
Goel said on Tuesday that, “while IGX is doing better than what we had expected”, volumes have been affected by the rise in gas prices from about $4-5 per MMBTu to over $30, before coming down a little. However, he expressed confidence that prices would fall and volumes on the exchange would pick up.
The press release of today said the average gas price discovered on the exchange in February was $24.6 per MMBTu. “The price discovered on the IGX is reflective of India’s gas demand and supply, including the LNG long-term, spot and domestic gas prices.”
One upside for IGX is the ongoing ‘discovered small fields’ programme of the government, under which it auctions small and marginal oil and gas fields already discovered and found to be too small for biggies like ONGC. The third round of auctions is underway; after several months of delay, the award of fields to the best bidders is expected to happen by April.
Companies who produce gas from these fields might find it more remunerative to sell their gas on the exchange, than either directly to customers or to the public sector gas trader, GAIL.