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Indian Gas Exchange plans to soon launch small-scale LNG trading, awaits PNGRB nod

The Indian Gas Exchange (IGX) plans to soon launch small-scale liquefied natural gas (LNG) contracts on its trading platform and has sought the approval of sector regulator Petroleum and Natural Gas Regulatory Board (PNGRB) for the same, the exchange’s chief executive officer Rajesh Mediratta said. This will be the first instance of exchange trading of natural gas in its liquefied or super-cooled form. Currently, the three-year-old IGX offers trading only in natural gas–domestic as well as regasified LNG.

According to Mediratta, small-scale LNG contracts will benefit buyers located in areas that are not connected by natural gas pipelines. He added that the PNGRB’s nod to the proposal is expected soon. Although there is no prohibition on LNG trading in India, IGX is required to seek the regulator’s approval before launching any new contract.

Small-scale LNG refers to direct use of LNG in the liquid form, instead of the conventional route of regasifying it and then using it as natural gas. Regasified LNG, which is essentially natural gas, needs pipelines to be transported to consumers. In areas that are not covered by a natural gas pipeline network, small-scale LNG, which is supplied using cryogenic road tankers, is seen as an alternative route for increasing natural gas consumption.

LNG can be directly used as fuel for heavy commercial vehicles, and is viewed as an alternative for diesel in that segment. A few Indian oil and gas companies have plans to push the use of LNG directly as a vehicular fuel and small-scale LNG fits well into those plans. According to Mediratta, currently around 0.7 million standard cubic metres a day (mscmd) of LNG is transported by road in India, but the quantum is expected to jump to 5 mscmd over the next five years.

IGX, which is India’s only physical delivery-based gas exchange, plans to launch small-scale LNG contracts for delivery from five LNG terminals—Dahaj, Dabhol, Hazira, Kochi, and Ennore, and plans to add more terminals later.

© The Indian Express Pvt Ltd

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