Establishing Gas Trading Hub/Exchange in the country

It has been agreed to establish the gas trading hub(s)/exchange(s) in the country wherein the natural gas can be freely traded and supplied through a market mechanism.

Development of Natural Gas Grid:

To develop the natural gas grid, Government has taken a decision to provide a capital grant of Rs. 5176 crore (i.e. 40% of the estimated capital cost of Rs. 12,940 Crore) to GAIL for development of a 2655 Km long Jaddishpur-Haldia/Bokaro-Dhamra Gas Pipeline (JHBDPL) project.

This pipeline will transport Natural Gas to the industrial, commercial, domestic and transport sectors in the States of Bihar, Jharkhand, Odisha, West Bengal and Uttar Pradesh.

An Integrated Refinery-cum-Petrochemical Complex:

Oil Public Sector Undertakings (PSUs) namely Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have decided to set up an integrated refinery-cum-petrochemical complex with a refining capacity of 60 MMTPA (Million Metric Tonnes Per Annum) at Babulwadi, Taluka Rajapur in Ratnagiri District in the state of Maharashtra.

Background:

The establishment of a hub is an attempt to meet operators’ demands for the adoption of a market-based gas-pricing regime. But India faces challenges in making the dream a reality, amid concerns over third-party access and competition.

The gas hub plan ties in with Prime Minister Narendra Modi’s efforts to boost the share of natural gas in India’s energy mix to 15% by 2030, from just over 6% now.

Domestic supply is also increasing. ONGC, India’s largest producer, supplied 23.5bn cubic meters of gas in the 2017-18 financial year and plans to almost double this within the next four years.

The Indian authorities, are considering overhauling the policy of fixed domestic gas prices, currently based on a formula derived from prices in the US, Canada, UK and Russia. Delhi sees itself as a potential candidate for Asia’s largest LNG trading hub, in a region that lacks accurate benchmarks reflecting Asian gas fundamentals.

Source: PIB