On April 24, 2024, the Indian Gas Exchange (IGX) launched small-scale liquefied natural gas (ssLNG) contracts on its platform, after receiving approval from the Petroleum and Natural Gas Regulatory Board. This is a significant step towards addressing the demand for natural gas in areas that are not connected to the national gas grid.
The introduction of ssLNG contracts on the IGX aims to address the growing gas demand from industries and city gas distribution companies that do not have access to pipeline networks. Through ssLNG, they can now procure liquefied gas through LNG tankers at competitive rates under daily, fortnightly and monthly contracts. Initially, this contract is launched at the Dahej and Hazira LNG terminals, with plans to expand to other terminals, including Dhamra, Mundra, Ennore, Kochi, and on-land ssLNG stations at Vijaipur.
Natural gas is primarily supplied through pipelines in the country. As a result, industries and commercial establishments without access to the grid primarily rely on trucks for LNG transportation. The demand for road-transported LNG is projected to increase to 5 mmscmd over the next five years. ssLNG contracts present a win-win situation for both buyers as well as sellers. They provide a platform for sellers to trade LNG. Transporting natural gas in liquefied form via trucks will enable the transportation of larger volumes, potentially making it economically viable for buyers not connected to pipelines. Further, it ensures a transparent and fair procurement process with enhanced payment security.
