India to set up natural gas trading hub
The Union Government plans to set up a natural gas trading hub to boost consumption of natural gas in India. The hub would be used for the trade and supply of natural gas through a market-based mechanism instead of multiple formula driven prices.
The Union Government plans to set up a Gas Trading Hub / Exchange (GTHE) by October 2018, thus creating an Indian gas benchmark that will spark an increase in the consumption of the cleaner-burning fuel.
The Indian oil regulatory board, Petroleum and Natural Gas Regulatory Board (PNGRB), has sought bids to hire a consultant to help develop a regulatory framework for operationalising the gas trading and exchange hub.
The main objective of setting up the gas trading hub is to boost consumption of natural gas in India.
According to PNGRB, the government has envisaged ushering into a gas-based economy by increasing the share of natural gas in the primary energy mix of the country from current 6 per cent to 15 per cent by 2030.
The hub would be used for the trade and supply of natural gas through a market-based mechanism instead of multiple formula driven prices.
Currently, the government fixes the price of the bulk of domestically produced natural gas using the price prevalent in gas-surplus nations such as US, Canada, UK, and Russia.
In order to move towards a gas-based economy, the Union Government is laying focus on:
- Increasing the availability of natural gas by enhancing the domestic production
- Encouraging the import of Liquefied Natural Gas (LNG)
- Completion of national pipeline grid
- Speedier roll out of City Gas Distribution network in the country.
• The Oil Ministry has directed the PNGRB to initiate steps for framing of necessary regulatory framework to enable the establishment and operation of a GTHE.
• The PNGRB would visit USA, UK, and Australia, where the gas trading hub is successfully operating, to decide if there is a need to amend existing regulations.
• The target for launch of the gas trading hub has been set for October 2018.
• India is not the only country that is planning to launch a gas trading hub. China also has plans to launch a natural gas trading hub in Chongqing this year.
• The Henry Hub in Louisiana, US is currently the world’s biggest natural gas hub. Helping the hub is vast domestic production and consumption as well as the world's biggest and most freely accessible pipeline network, which stretches into Canada and Mexico.
• Britain has National Balancing Point (NBP) as the main gas hub.