In pics: All you need to know about India's first natural gas exchange

What is IGX

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Indian Gas Exchange (IGX), the country's first natural gas exchange, started its operations from Monday. 


How does it work

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Photo: Shutterstock


The fully-automated trading platform, set up by the Indian Energy Exchange (IEX), allow buyers as well as sellers to trade for imported natural gas in both spot market and in the forward market, across three hubs —Dahej and Hazira in Gujarat, and Kakinada in Andhra Pradesh.


What is its significance

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Usually, regular contracts for natural gas supply are as long as six months to a year. IGX allows much shorter contracts from delivery on the next day to up to a month. 

IGX plays an instrumental role in transforming India's gas markets, positioning the country as a sustainable economy and enhancing industry's competitiveness. 

Besides, the competitive price discovery will facilitate availability of gas at lower prices for the cross-spectrum of industries across India, stimulate demand and facilitate greater investments in domestic gas exploration.


Does IGX offer trade for domestically produced natural gas?

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To date, the government decides the price of domestically produced natural gas and therefore it can not be traded on the gas exchange.

However, in view of recent appeals by domestic producers regarding the prices set by the government, Union Petroleum Minister Dharmendra Pradhan has batted for a market-driven pricing mechanism by introducing a new tariff policy for natural gas soon.

IGX officials said that a highly liquid gas exchange, which prices gas fairly may lead to the government stepping away from pricing domestically produced gas.


Recent developments

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The ministry of petroleum and natural gas is likely to seek the approval of the Union Cabinet for the unbundling of GAIL. 

In addition, the government is yet to take a final call on whether nomination gas will be part of the gas hub. 

If nomination gas sold at a lower rate is brought into this trading hub, it will be a huge boost for the producers like ONGC and Oil India.


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