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