(ET)
India will take its first baby step towards deregulation of the natural gas market on Monday when oil minister Dharmendra Pradhan launches the country’s first gas exchange, a move that will ultimately lead to market-driven pricing and boost consumption by improving availability.
IEX, the market leader in power trading, is offering the platform with Dahej and Hazira in Gujarat and Kakinada in Andhra Pradesh as delivery locations – or ‘hubs’ – for pricing the contracts. This is unlike the US, which only has the Henry Hub – a gas pipeline located in Erath, Louisiana – as the delivery points for contracts on the NYMEX.
The choice of delivery hubs indicates IEX initially expects trading to be limited to imported gas till sufficient output from domestic fields or CBM blocks awarded with marketing freedom to operators flows into the market. Dahej and Hazira have terminals for importing liquefied gas in ships, or LNG. Proposals for building LNG terminal at Kakinada are under consideration.
