An exchange is a market where securities, derivatives, commodities, and other financial instruments are traded. The exchanges not only have physical establishments, but also have electronic exchanges that facilitate online trading of commodities. When the natural gas is traded via an exchange, it is called “Gas Exchange”.
Trading of Gas as an “energy commodity” helps achieve market-based price discovery of gas instead of fixing arbitrary rates. It establishes a transparent path for trade of gas.
The price of the gas in Gas exchanges is determined on the basis of demand and supply of the commodity.
In India, Petroleum and Natural Gas Regulatory Board (PNGRB) is the regulator for gas storage, distribution, transport, physical delivery etc. It has also taken the role of regulating the Gas exchange.
Indian Gas Exchange
Indian Gas Exchange (IGX) is a digital trading platform, which enables the buyers and sellers of natural gas to trade for imported natural gas.
IGX, a wholly owned subsidiary of the Indian Energy Exchange (IEX), was launched in June 2020, as the first Gas exchange of India.
The imported Liquefied Natural Gas (LNG) is converted to Natural gas at atmospheric temperature by a process called ‘Regasification’ and then sold to buyers.
The platform provides a fair and transparent marketplace to multiple buyers and sellers and increase investment in the sector.
At present IGX offers trade in 5 contracts- daily, fortnightly, weekday, weekly, and monthly.
The Natural Gas is traded across three hubs namely Hazira and Dahej in Gujarat and KG Basin in Andhra Pradesh.
After its launch, IGX have traded around 74,600 million British thermal units of natural gas till now.
IGX to operate as Gas Exchange after PNGRB approval
Recently, IGX became the first regulated Gas exchange, after it was authorized by the Petroleum and Natural Gas Regulatory Board (PNGRB) for 25 years. IGX will now soon start trading with more than 500 registered clients and 14 members.