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Gas price drop to make industrial users shun dirtier fossil fuels, says Indian Gas Exchange head

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The head of India’s only gas trading platform is optimistic that the drop in prices this year will encourage industrial users in the country to switch from dirtier fossil fuels.

Trading volumes on the Indian Gas Exchange are set to rise due to a greater availability of cheaper supplies, Chief Executive Officer Rajesh Kumar Mediratta told Bloomberg Television in an interview. The bourse is looking to offer some longer-duration contracts to help buyers access gas at set prices, he said.

Coal-reliant India has a target to increase the share of gas in its energy mix to 15% by the end of the decade, from about 6% now. Both spot LNG and gas from Indian deep water fields are traded on the bourse. Local prices of domestically-produced gas have fallen, partly due to a drop in the Asian benchmark that has more than halved this year.

Indian consumers from power plants to petrochemical facilities are highly price-sensitive as gas competes head-to-head with cheaper and dirtier alternatives. But, the government has been active in supplying cheaper gas to households, fuel stations and industrial users. Demand in the country, the world’s fourth-biggest LNG buyer, is expected to rise as pipeline infrastructure is expanded.

The exchange, which offers trading in spot and forward contracts, started in 2020. Its investors include State-owned Gail India Ltd., Oil and Natural Gas Corp., Indian Oil Corp.

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