IGX | - GAS Connect...GAS Connect APRIL 2020, ISSUE 01 VOL. 01 FROM THE CEO’S DESK SECTION-I Dear...
Transcript of IGX | - GAS Connect...GAS Connect APRIL 2020, ISSUE 01 VOL. 01 FROM THE CEO’S DESK SECTION-I Dear...
GAS Connect
APRIL 2020, ISSUE 01 VOL. 01
FROM THE CEO’S DESKSECTION-I
Dear All,
Wearepleasedtopresenttoyouthefirsteditionof‘GASConnect’amonthlynewsletterthatoffersinsightintothegasindustryalongwithregulatoryandIGXupdate.
TheenergysectorgloballyaswellasinIndia,isundergoingatransformation.Wearewitnessinganacceleratedshifttowardscleanerandsustainablesourceswithincreasedemphasisonrenewablesandnaturalgas.Countriesacrosstheglobeareforayingintoactiveresearchtocommercialisenewsustainabletechnologies.
Todecarbonisetheeconomy,theGovernmenthassetanambitioustargetofincreasingtheshareofgasintheenergymixfromthecurrent6%to15%by2030.Technology-enabledenergymarketplacesareuniquelypositionedtofacilitatethistransition.
AsawhollyownedsubsidiaryoftheIndianEnergyExchange(IEX),theIndianGasExchange(IGX)ispoisedtoarchitectIndiaasagas-basedeconomy.TheExchangeisequippedwithcutting-edgetechnologyinpartnershipwithGMEX,UnitedKingdomandisbackedbyleadershipandprovenexperienceandexpertiseofIEXinestablishingandoperatingaveryvibrantandcompetitiveelectricitymarketplaceinIndia.TheGasExchangewillfacilitatetradeinphysicaldeliveryofgasfromdesignatedhubsthroughworldclassproductsandenablecompetitivepricediscovery,therebyspurinvestmentsinthegasvaluechain.
Wehopeyoufindthisinitiativemeaningfulandlookforwardtostayingconnectedwithyou.
Regards
Rajiv SrivastavaMD & CEO, IEX
I. FromtheCEO’sDesk 01
II. GlimpseofNaturalGasProduction,AvailabilityandConsumption–January2020
02
III. IndustryandRegulatoryUpdate
03
MediaNews 05
IV. IndianGasExchangeUpdate 07
V. BoostingGasConsumptioninIndiathroughaMarket-drivenApproach–RajeshMediratta–Director,IGXIndia
09
NEWS , INS IGHTS & ANALYT ICS
IN THIS ISSUE...
PB 1
GLIMPSE OF NATURAL GAS PRODUCTION, AVAILABILITY AND CONSUMPTION – JANUARY 2020 DomesticgrossproductionforthemonthofJanuary2020,was84MMSCMD(Adecreaseof8.3%overthecorrespondingmonthofthepreviousyear)
TotalimportsofLNGduringthemonthofJanuary2020,were90MMSCMD(Anincreaseof25.1%overthecorrespondingmonthofthepreviousyear)
NaturalgasavailableforsaleduringJanuary2020,was155MMSCMD(Anincreaseof7.0%overthecorrespondingmonthofthepreviousyear)
TotalconsumptionduringJanuary2020,was153MMSCMD.Majorconsumerswerefertilizer(31%),CityGasDistribution(CGD)(20%),power(17%),refinery(14%),andpetrochemicals(6%)
DOMESTIC NATURAL GAS GROSS PRODUCTION
7.2
90 8.3%
22.7%
6.2%
5.5%
84
6.714.5
11.2
70.0
January 2019 January 2020 (P)
66.2
ONGC Pvt./JVs OilQty in MMSCMD
SECTORAL CONSUMPTION OF NATURAL GAS
Fertilizer City Gas Power Refinery Petrochemical Others
Domestic gas Consumption R-LNG ConsumptionQty in MMSCMD
TOTAL LNG IMPORTS
71.6
89.6
January 2019 January 2020 (P)
January 2020 (P)
25.1%
Qty in MMSCMD
32
14 7
18
9
11
813
19
1717
Source: ppac.gov
SECTION-II
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INDUSTRY AND REGULATORY UPDATEINDIA 2020 - ENERGY POLICY REVIEW
International Energy Agency
IEArecentlypublished‘India2020-EnergyPolicyReview.’FromaNaturalGasperspective,IEAwelcomedGOI’saimtoincreasetheshareofnaturalgasinthecountry’senergymixto15%by2030from6%,asthiswillallowIndiatoimproveenvironmentalsustainabilityandflexibilityofitsenergysystem.Theycommendedgovernment’scommitmenttowardsfurtherliberalisingIndia’snaturalgasmarketandrecommendedstrengtheningregulatorysupervisionofupstream,midstreamanddownstreamactivitiesaspartoftheoverallmarketreformsasitwillbringgreaterefficiencyanddriveupdemandforgasandinvestmentingastransportinfrastructure.
Aliquidandwell-functioningdomesticgasmarket,accordingtothem,wouldbeastrongpillarforIndia’ssecurityofgassupply.
Key recommendations of IEA
GovernmentofIndiashould:
Establishpermanentenergypolicyco-ordinationinthecentralgovernment,withanoverarchingnationalenergypolicyframeworktosupportthedevelopmentofasecure,sustainableandaffordableenergysystem.
ContinuetoencourageinvestmentinIndia’senergysectorby:
• Ensuringfullnon-discriminatoryaccesstoenergytransportnetworks
• Workingwiththestatestoimplementpowersectorandtariffpolicyreforms,withafocusonsmoothintegrationofvariablerenewableenergyandpowersystemflexibility
• Movingfromgovernmentallocationofenergysuppliestoallocationbymarketpricing
• Furtherrationalisingsubsidiesandcross-subsidies.
Improvethecollection,consistency,transparencyandavailabilityofenergydataacrosstheenergysystematcentralandstategovernmentlevels.
Adoptacoordinatedcross-governmentstrategyforEnergyResearch,Development&Deployment,whichenablesimpact-orientedmeasurementanddisseminationofresults.
EnsureIndia’sinternationalenergycollaborationcontinuestobestrongandmutuallybeneficial,highlightingthecountry’senergysuccessesandsupportingcontinuedopportunitiestolearnfrominternationalbestpractices.
SECTION-III
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LIST OF GEOGRAPHICAL AREAS (GAS) FOR UPCOMING 11TH CGD BIDDING ROUND
PNGRB,inordertofurthertheCityGasDistributionnetwork,isintheprocessoffinalisingthegeographicalareasfortheupcoming11thCGBBiddingRound.Atentativelisthasbeenpreparedasfollows:
Sl. No . Geographical Area State/UT
1 SouthAndamanDistrict Andaman&NicobarIslands2 Kurnool,JogulambaGadwal,WanaparthyandPrakasamDistricts AndhraPradeshandTelangana3 Guntur,Nagarkurnool,Mahabubnagar,NarayanpetandYadgirDistricts AndhraPradesh,Karnatakaand
Telangana4 Baska,Barpeta,Bongaigaon,ChirangandNalbaridistricts Assam5 Darbhanga,MadhubaniandSupauldistricts Bihar6 Gopalganj,SiwanandDeoriadistricts Bihar&UttarPradesh7 BalodaBazar,GariyabandandRaipurdistricts Chhatisgarh8 Gumla,Latehar,LohardagaandSimdegiadistricts Jharkhand9 Jammu,Reasi,Samba,KathuaandPathankotdistricts Jammu&KashmirandPunjab
10 Chikkballapurdirstrict Karnataka11 Idduki,KottayamandPattanamtittadistricts Kerala12 AgarMalwa,Neemuch,MandasurandJhalawardistricts MadhyaPradeshandRajasthan13 Burhanpur,Khandwa,KhargoneandHardadistricts MadhyaPradesh14 Betul,ChhindwaraandSeonidistricts MadhyaPradesh15 Damoh,Jabalpur,KatniandMandladistricts MadhyaPradesh16 Hoshangabad,Narsinghpur,SagarandVidishadistricts MadhyaPradesh17 BuldanaandParbhanidistricts MadhyaPradeshandMaharashtra18 Beed,JalgaonandJalnadistricts Maharashtra19 Akola,HingoliandWashimdistricts Maharashtra20 AmravatiandYavatmaldistricts Maharashtra21 ChandrapurandWardhadistricts Maharashtra22 Nagpurdistrict Maharashtra23 Alirajpur,NandurbarandBarwanidistricts Maharashtra24 KoraputandMalkangiridistricts Odisha25 Gajapati,KalahandiandRayagadadistricts Odisha26 Yanamdistrict Puducherry27 TarnTarandistrict Punjab28 Fazilka(exceptareaalreadyauthorised),GanganagarandHanumangarhdistricts Punjab&Rajasthan29 BikanerandChurudistricts Rajasthan30 Jhunjhunu,SikarandNagardistricts Rajasthan31 Dausa,Karauli,SawaiMadhopurandTonkdistricts Rajasthan32 Dharmpuri,Krishnagiri,TiruvannamalaiandVillupuramdistricts TamilNadu33 AriyalurandPerambalurdistricts TamilNadu34 NamakkalandTiruchirapallidistricts TamilNadu35 Pudukottai,SivagangaandThanjavurdistricts TamilNadu36 Madurai,TheniandVirudhnagardistricts TamilNadu37 Kanyakumari,ThoothukudiandTiruneveliKattabodistricts TamilNadu38 DindigulandKarurdistricts TamilNadu39 NilgirisandErodedistricts Tripura40 SouthTripuradistrict Tripura41 Amroha&Sambhaldistricts Uttar Pradesh 42 Kasganjdistrict Uttar Pradesh 43 PuruliaandBankuradistricts WestBengal44 EastMednipore,WestMedniporeandJhargramdistricts WestBengal
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GAS PRICE CUTS ON THE WAY
Infraline, 09 March 2020
Theslumpinglobalgaspricingislikelytoresultindomesticnaturalgaspricedeclinemorethan20%fromApril1,whichisexpectedtoboostdemandandincreaseconsumption,includingthatofcitygas.Thepricesareexpectedtofalltoabout$2.5perMMBTUforaperiodofsixmonthsfrom$3.23perMMBTU.
Thepriceofgasfromdifficultfieldsisalsolikelytobecutto$5.5perMMBTUfrom$8.43MMBTU.AnalystssaiddataindicatedthegaspriceatUSBenchmarkHenryHubhasfallenbelow$2perMMBTUthelowestsince2016.
RISING US LNG SUPPLY TO MAKE NATURAL GAS AFFORDABLE FOR INDIA
ET Bureau, March 04, 2020
ThechiefoftheUSenergyregulatorsaidthatrisingUS LNGsupply andtheefficiencyofitsproducersandtransporterswillmakenaturalgasaffordableforIndia. “Lawofsupplyanddemand,moreUSgascontributingtotheglobalsupply,I’moptimisticwillbringdownthecostofgasglobally.TheefficiencyoftheUSindustrywhenitcomestoproduction,transportation,I’mhopefulthatthecostofgaswillcomedowntowhereitwillbeaffordableforIndia,”said NeilChatterjee,Chairmanofthe FederalEnergyRegulatoryCommission,whoisonavisittoIndia,meetinghiscounterpartsandotherenergyofficials. TheshalerevolutionofthepastdecadehasresultedinmassivecheapsuppliesofnaturalgasintheUS,reshapedtheglobalindustryandmadetheUSworld’stopproducerandakeyexporterofthefuel. IndiahassomecontractsforUSLNGbuthightransportationcostsmakeitexpensiveforIndiancustomers.Indiacurrentlyimportsabouthalfofthegasitcurrentlyuses.Theimportsareexpectedtoriseasthegovernmentaimstoexpandtheshareofnaturalgasintheprimaryenergymixto15percentby2030fromthecurrent6percent.
INDIA’S RS. 50,000 CRORE CITY GAS INVESTMENT PLAN GAINS VIABILITY ON LOW LNG PRICES
ET EnergyWorld, March 04, 2020
TheviabilityofIndia’sRs.50,000crorecapitalexpenditureplanfor citygasdistribution (CGD)overthenextfouryearshasimprovedwiththepriceofliquefied naturalgas (LNG)expectedtobesubduedduringtheperiod.
LNGaccountsfornearlyhalfofCGDconsumptionvolumeandalowerpriceaugurswellforbothvolumesandoperatingmarginsofdistributors,andprojectreturns.SpotpricesofLNGhavemorethanhalvedon-yeartoadecadallowoflessthan$3permillionmetricBritishthermalunits(mmBtu)inFebruary2020becauseofoversupplyandtheCoronavirusoutbreak. Thishassharplyimprovedthecompetitivenessofpipednaturalgas(PNG)comparedwithfurnaceoil,liquefiedpetroleumgas(LPG)andgasoline,pricesofwhicharetypicallylinkedtocrudeoil. GlobalLNGpricesareseensofteroverthemedium-termbecausesupplyisoncoursetoexceeddemandgrowth,withaliquefactioncapacityofabout180milliontonne–equalto40percentofcurrentworldcapacity–settobecommissionedoverthenext4-5years.Domestically,regasificationcapacity,too,isexpectedtowitnessrobustgrowth,outpacingLNGdemand.
GAIL DECKED UP FOR NATURAL GAS TRANSPORTATION
PTI, Feb 07, 2020
GAILhasabout11,000kmlonggaspipelinenetworkandisdevelopingabout3,500kmlongpipelinesprojectsinthecountry.SeveralmeetingshavebeenheldintheministryonsplittingGAILbyspinningoffitsmarketingbusinessintoaseparatecompanyandsellingittoastate-ownedfirm.
Thegovernmenthasa54.89percentstakeinGAILIndia.OilministerDharmendraPradhanstatedthatthegovernmenthasbeentakingstepstomakeIndiaagas-basedeconomy.Aspartofthisplan,ithasevenprovidedbudgetarysupportofRs5,176crore,or40percentoftheprojectcost,forlayingofagaspipelinefromJagdishpurinUttarPradeshtoWestBengal,JharkhandandOdisha.
ThepolicyandtheprovisionsofthePetroleumandNaturalGasRegulatoryBoard(PNGRB)Act,2006provideforallentitiesauthorisedtolaypipelinesincludingGAILtoprovidemandatoryopenaccesstotheirgaspipelineinfrastructureoncommoncarrierprincipleonanon-discriminatorybasis.ThisopenaccesstothirdpartiesshouldbegivenattransportationratesdeterminedbyPNGRB.
SourcessaidrefinersIndianOilCorp(IOC)andBharatPetroleumCorpLtd(BPCL)haveshowninterestinacquiringGAILtoexpandtheirgasmarketingbusiness.
Inthelongrunandwiththematuringofgasmarkets,itisenvisagedinthepolicythattheauthorisedentitieswillhave
MEDIA NEWS
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transportationofnaturalgasastheirsolebusinessactivityandwillnothaveanybusinessinterestinthegasmarketingorcityorlocalgasdistributionnetworks,”Pradhansaid.
PNGRB PLANS TO WAIVE CONDITION TO TIE UP SUPPLIES FOR 5 YEARS FOR CGDS
Sanjeev Choudhary, ET Bureau – 20 Feb 2020
Aspermarketnews,PNGRBisplanningtowaiveakeyconditionforcitygasdistributorsofsigningnaturalgaspurchasepactswithin180daysfromtheawardoflicenceinresponsetocompanies’reluctancetogoforsuchdealsamidaglobalsupplyglutthathasledtoasharpdeclineinpricesandamplifiedvolatility.
USshalerevolutionandtheconstructionofseveralgasexportfacilitiesacrosstheglobeoverthepastfewyearshavemadesuppliesplentifulandcheaper,promptingthePetroleumandNaturalGasRegulatoryBoardtorevisitthiscondition.“Forcingthemtotieupgasforfiveyearsatthebeginningofthelicenceperiodwon’tbeinthecommercialinterestofcitygaslicenceholders.Theyshouldhaveflexibilityinsourcinggas,”saidapersonfamiliarwithPNGRB’splans.
Theremovalofsuchrestrictionwillenablecitygasdistributorstobetterrespondtomarketsituationsandserveconsumersbetter,speakingonconditionofanonymity.Theproposedmovewouldhelpseveralcompaniesthatwonlicencesintheninthandtenthroundsofcitygasauctionheldinthepasttwoyears.
PNGRB PLANS TO ALLOW LENDERS TO REPLACE DEFAULTING CITY GAS COMPANIES
Sanjeev Choudhary, ET Bureau, 28 Feb 2020
TheLenderswillhavearighttoreplaceadefaultingcitygaslicenseewithanewentityinconsultationwiththedownstreamregulator,asperadraftproposalbythePetroleumandNaturalGasRegulatoryBoard(PNGRB).
Theproposedamendmentisaimedataddressingakeyregulatoryconcernoflendersthatwasholdingbackfinancialclosureformanycitygaslicenceareas.Theregulator,whichhasdistributed136licencesinthepasttwoyearsandaimstoawardlicencesforanother50districtsthisyear,expectstheproposedchangestohelpexpeditefinancialclosureforcurrentandfuturelicenseesandspeedupworkprogramme.
Thecurrentrulesbartransferof50%ormorestakeinalicenseareatoanynewpartyinthefirstfiveyearsofthelicenseortillthecompletionofthepromisedworkprogramme,givingriseto
concernsthatlendersmaybestuckifalicenseedefaultedonservicingloansinearlyyears.
Thenewregulatoryproposalwouldpermitlenderstogetanewentitytotakeoverthelicenceandtheliabilitiesthatcamewithit.
NATIONAL CONCLAVE ON EMERGING OPPORTUNITIES IN NATURAL GAS SECTOR HELD IN NEW DELHI
Press Information Bureau - Government of India – 23 Jan 2020
MinisterofPetroleumandNaturalGasShriDhamendraPradhanhascalleduponallthestakeholderstocontributepositivelyintransformingIndiaintoagas-basedeconomy. Presidingoverthenationalconclaveonemergingopportunitiesinthenaturalgassector,hesaidthatthepresentshareofgasintheenergybasketofthecountryis6.2%andthetargetistotakeitto15%by2030. Hesaidthattheworldaverageis24%whilewithinthecountry,Gujarathasa26%shareofgas-basedenergy.
Describingthenaturalgasasthenextgenerationfossilfuelthatiscomparativelycheaperandlesspolluting,ShriPradhansaidthattheGovernmenthastakenanumberofinitiativestogivethrusttogas-basedeconomy. Hesaidthatdomesticgasproductionislikelytoincreaseinthecurrentfinancialyearto34.55billioncubicmetre. PricingandLNGmarketingfreedomshavebeengiventogasproducers,LNGterminalcapacityisbeingaugmentedandthenationalgasgridisbeingdeveloped. ShriPradhansaidthatthisisthefirsttimethatGovernmentofIndiaisprovidingRs.10,500croreworthofviabilitygapfundingforlayingpipelineinEasternandNorth-EasternIndia. HesaidgaspipelinenetworkwillbereadyfromKutchtoKohimaandKashmirtoKochi. ShriPradhansaidthat4lakhcrorerupeeworthofinvestmentislikelytobemadeinsuchprojectswhichisachallengeaswellasanopportunity.HesaidthatthesourcesofimporthavebeendiversifiedandtheGovernmentisholdingdiscussionswithgas-exportingcountriesforgettingmoregasonfavourableterms.HesaidthatCBGisagreatinitiativethathasthepotentialtogeneratewealthfromwaste,provideemployment,protecttheenvironment,andgiveaboosttotheeconomy.
CallingupontheStatestofullycooperateandsupportthegasinfrastructureactivitiesandprojects,hesaidMinistryofPetroleumandNaturalGashaspreparedadraftPolicyofCityGasDistribution(CGD),whichmaybeadoptedbyStatestofacilitatesuchactivities.
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IGX UPDATEMEMBER ADVISORY COMMITTEE
TheMemberAdvisoryCommittee(MAC)-IGXcomprisesofover25majorstakeholdersofgassectorlikeGAIL,BPCL,Shell,PLL,PIL,H-Energy,NFL,GSFC,GSPCL,MGL,IGL,Thinkgas,Trafigura,TorrentGas,AdaniGas,RelianceIndustries,NationalFertilizersLtd,ManikaranPower,SaintGobainetc.
ThefirstMACmeetingtodiscussthecreationofaliquidandvibrantmarketfornaturalgastradingwasheldon20thFeb2020,inNewDelhi.ThediscussionsrevolvedaroundtheissuesandchallengesintheexistinggasmarketandhowtohelpdevelopanefficientandtransparentgasmarketinIndia.
The launch of a new Gas Market Platform is indeed an important milestone for the Gas industry. We certainly welcome the idea of trading in INR. It is especially great to see that gas price will be discovered based on local demand and supply, rather than being indexed to any external benchmark.
- Suresh P ManglaniCEO, Adani Gas
We would like to offer our heartiest congratulations to IEX on the launch of its exclusive Gas trading exchange in India. It is an important step for the industry when it comes to standardising price discovery. Going forward, we hope to see the introduction of gas futures contracts based on IGX prices.
- Darshan HiranandaniMD and CEO, H Energy
The launch of IGX speaks to the growing maturity of the Natural Gas industry in India. We hope to see IGX minimise the number of hubs to prevent liquidity fragmentation. We could foresee this development bringing greater transparency and effi ciency in Gas trading, thereby boosting demand for Gas. Overall, the conceptualise and launch of IGX is a commendable step by IEX.
- Akhil MehrotraCEO, Pipeline Infrastructure Ltd (PIL)
SECTION-IV
GLIMPSES FROM MEMBER ADVISORY COMMITTEE MEETING
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WORKSHOP WITH IEX MEMBERS, MARCH 2020, NEW DELHI
IGXorganisedahalf-dayworkshopforexistingIEXtradermemberson16th and 17thMarch2020,inNewDelhi.
Overtwodays,severaltradermembersfromassociationssuchasManikaran,GMR,TataPower,PTC,KreateEnergyIndiaPvt.Ltd.ShreeCementLtd.etc,wereaddressedbyourBusinessDevelopmentHead(IGX),Mr.DeepakMehta.
Thediscussionsrevolvedaroundoverallgasmarketsand thenaturalgassectorintheIndiancontext,thepossibilities oftradingnaturalgas,themarketmodelofferedbyIGX, theproductsofferedandriskmanagement.
Asneakpeekoftheworkshop,brimmingwithideastoshapeagreenerfutureofIndia
IGX WELCOMES ON-BOARD NEW MEMBERS – MANIKARAN AND GMR
TeamIGXisensuringcontinuousinteractionwithkeyplayersandworkingpro-activelytobringon-boardmembersandclients.IGXhassuccessfullyenrolledManikaranandGMR,aswellas9otherclientsinMarch2020.
IGX SUCCESSFULLY CONDUCTS FIRST MOCK TRADING SESSION ON 20TH MARCH 2020
IGXconductedfirstmocktradingsessioninnaturalgas. Themocksessionwasattendedby15participantsincludingmajorplayerslikeGAIL,PetronetLNG,AdaniGas,GMR,aswellaskeytraders.ThesessiongavetheparticipantsanopportunitytoexperienceIGX’stechnologyplatformwhichisautomatedend-to-end.Themocksessionsawtradeinallthesixcontracts,rangingfromdayaheadtomonth-ahead,culminatingintotransparentandcompetitivepricediscovery.
FOKIA AND IGX WORKSHOP IN GUJARAT
TheFederationofKutchIndustriesAssociation(FOKIA),IEXandIGXcollaboratedtoorganiseaworkshopon‘sourcingpowerandgasthroughtech-enabledexchanges.’Thediscussionalsofocusedonhowtheelectricitycostintheindustrycanbebroughtdownbesidesweighingoptionsonhowtodealwithday-to-daypowerproblemsintheindustry.Theworkshopalsodiscussedhowthegaspricesforindustrialuseremainsincontrol.
WORKSHOPS ON DEVELOPING GAS TRADING PLATFORM IN GUJARAT
IGXorganisedahalf-dayworkshoponDevelopingaGasTradingPlatformon2ndMarchatAhmedabadand3rdMarch2020 at Vadodara.
Aforumof50participantsatAhmedabadandcloseto65participantsatVadodara,comprisingmainlyCGDcompaniesandmajorindustrieslikefertiliser,glass,ceramics,power,steelandchemicalssectorswasaddressed.
Theplatformfeaturesmultiplebuyersandsellerstotradeinspotandforwardcontractsatdesignatedphysicalhubs,whichinturnwouldenableefficientandcompetitivediscoveryofgaspriceswhilemaintainingmarketintegrity.
DeepakMehta,HeadBD,IGX,addressedtheparticipantsontheIGXmodelanditsproductoffering
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BOOSTING GAS CONSUMPTION IN INDIA THROUGH A MARKET-DRIVEN APPROACH - Rajesh Kumar Mediratta, Director, Indian Gas Exchange
Indiaisonthecuspofenergytransformationandmovingrapidlytowardsgreener,cleaner,affordable,andsustainableformsofenergy.Acrosstheglobe,naturalgasisgainingpopularityasacriticalcomponentofasustainableenergyfuture;giventhatithelpsreduceairpollutionandhasalowerGHGemissionascomparedtocoalandoil.TheglobalNaturalGasmarketisexpectedtobevaluedat64.36millionbytheendof2024,growingataCAGRof4.41%during2020-2024,accordingtotheGlobalNaturalGasMarket2020reportbyMarketwatch.Thelatestreportreleasedbyaninternationalagency,IEA,showsthattheelectricityproducedbynaturalgasworldwidewasmorethanthatofcoalforthefirsttimeever,whilewind-poweredelectricitynearlycaughtupwithcoal-firedelectricity.
InIndia,theshareofGasintheoverallenergymixhasbeengrowingsteadilytoreach6%asoftoday.DespitestronglatentdemandforNaturalgasinIndia,challengesininfrastructureandlackofaregulatoryframeworkhaveconstrainedthecountry’sgasconsumptionoverthepastdecade,at150MMSCMD.TheproactivestepstakenbytheMinistryofPetroleumandNaturalGastofosterinfrastructuredevelopmentareexpectedtoboostgasconsumptioninthecountry.
SomeofthekeydevelopmentswereundertakenbyPNGRBoverthelastfewyears,suchas:
Regulatedgaspricingtopromotegaseconomy
Changeinpriorityallocation
Changesinpipelinetariffsin2018toattractmoreinvestments
Focusonlast-mileconnectivity
DirectivesfromthejudiciaryandNGTtomovetocleanerfuels;and
Facilitatingmarketdevelopmentwillfacilitategrowthinthegassector.
TherewasanemphaticfocusonthegasandrenewableenergyinUnionBudget2020.Provisionstoexpandthenationalgasgridfrom16,200kmto27,000kmandtheintroductionofreformsfortransparentpricediscoveryofnaturalgaswillaidexpansionofthissector.Withthefirststeptakentowards
connectingthenorth-eastvianaturalgaspipelines,Indiamaysoonmakeitsmarkontheglobalfront.
TheGovernmentofIndiahassetapolicytargetofincreasingtheshareofnaturalgasinIndia’senergybasketfromthecurrent6.5%to15%by2030.ToundertakesuchanincreaseintheshareofnaturalgasinIndia,aninvestmentboostintheoverallgaseconomyvaluechainisimperative–includingdomesticproduction,re-gasificationofimportedLNG,transportation(pipelines)andend-useconsumption(industrial,commercialandresidentialapplications).Therequiredinvestmentscallforamarket-basedmechanismforgaspricingandallocationthatcangenerateeffectivepriceandprovidesignalstothemarket.Amarket-basedmechanismispossiblethroughatransparentandneutralnaturalgastradingplatformlikeIndianGasExchange.Additionally,IGXwillalsodrivecompetitionacrossthevaluechain,leadingtoinnovativebusinessmodelsandefficientcost-structures,thussupportingtheoverallambitionofaccesstoaffordablegas.Indiaismakingenergysecurityapriorityandaliquidandwell-functioningdomesticgasmarket,asalsosuggestedbyIEA(InternationalEnergyAgency),wouldbeastrongpillarforIndia’ssecurityofgassupply.
ThesuccessoftheIndianEnergyExchange(IEX)servesasanexcellentcasestudyforhowtheexchangemarketsapproachcouldhelpbolstertheenergymarketinIndia.Overtheyears,thepowerexchangemarkethasenabledreinforcementandaugmentationofpowergenerationandtransmissioncapacityinIndiaandefficientpricediscovery,thereforeincreasingtheaccessibilityandtransparencyofthepowermarketinIndiawhilealsoenhancingthespeedandefficiencyoftradeexecution.
Thegasindustryalsorequirestherightregulatoryframeworktoachievethebalancebetweensafeguardingtheinterestsofpipelineoperators,pricingexpectations,anddeliveryandbillingmechanisms.Measuressuchasanopenaccesspolicy,acrediblesystemoperator,mechanismstodecoupletransportfromthesellingofgas,andconducivetaxationpoliciescanhelptoalargeextent.
AneffectivegastradingplatformalongwithregulatoryenablementwillhelpbolsterthepathtowardsoptimisingtheenergymixthroughtheadoptionofnaturalgasonapanIndiabasis.
SECTION-V
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IgxIndia igx-india