India is set to build its first natural gas trading platform, which is expected to lead to a market-determined pricing of gas and also encourage investment in the sector.
Minister for Petroleum and Natural Gas, Dharmendra Pradhan, reiterated that they would move the Cabinet to seek approval for setting up a gas trading platform. The platform is expected to be similar to leading international hubs like the Henry Hub of the US, and the National Balancing Point (NBP) of the UK.
The gas produced in India currently is reportedly governed by a price formula mandated by the government, and certain sectors such as fertilizer and city gas have priority over others. This is mainly attributed to the local production being low and around half of the gas requirement being met by imported liquefied natural gas (LNG).
Meanwhile, some of the top oil industry executives met Prime Minister Narendra Modi recently with demands to move towards a market pricing for that natural gas that is produced in the country.
Pradhan pointed out that the proposed platform would bring in transparency in the market discovery of price and certainty on investment return to companies. He said that the gas exchange was in the interest of the Indian consumer. He also added that the world average gas consumption was 24% and in India, it was 6-7%, apart from which there was a huge potential of gas consumption in various sectors of the economy like power, manufacturing, and transportation.
The Minister said that in the coming 10 years, there would be scope for $300 billion worth of hydrocarbon projects, and the government would create a think-tank that would facilitate the import reduction and transition to a gas-based economy.