IGX launches ssLNG contracts, to take gas availability beyond national grid

New Delhi: Close on the heels of receiving approval from the Petroleum and Natural Gas Regulatory Board (PNGRB), the Indian Gas Exchange (IGX) has launched contracts for small-scale Liquefied Natural Gas (ssLNG) on its platform in a bid to address the demand for fuel in areas not connected to the national gas grid.

"The introduction of ssLNG contracts on IGX aims to address the growing gas demand from industries and CGD (City Gas Distribution) companies that do not have access to pipeline networks," IGX said in a statement.

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 Dahej and Hazira LNG terminals in Gujarat.

Later, it will be launched at other terminals namely Dhamra in Odisha, Mundra in Gujarat, Ennore in Tamil Nadu, Kochi in Kerala, 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 million standard cubic metre per day over the next five years.

Small-scale LNG contracts present a win-win situation for both the buyers as well as sellers. It would serve as a platform for sellers, who can come and trade LNG. Transporting natural gas in liquefied form via trucks will allow larger volumes to be transported, potentially making it economically viable for buyers not connected to pipelines. Further, it will also ensure a transparent and fair procurement process with enhanced payment security.

Speaking at the occasion, PNGRB member Anjani Kumar Tiwari said, "Small-scale LNG serves as the cornerstone for our gas-based economy, enabling us to expand our reach beyond traditional pipelines. On the supply side, it can bring gas from remote and difficult fields and on the demand side, it can help an industry source gas which is not connected to the gas grid." "With this vision, we provided approval to IGX for launching ssLNG contracts on their platform. PNGRB endeavours to be a facilitator to support the growth of ssLNG in India by providing a comprehensive regulatory framework. We will also be continuously evaluating the present regulations and making amendments to support the industry in navigating challenges," he said.

Speaking at the occasion, PNGRB's former chairman D K Saraf said while pipelines stand as the optimal means for gas transportation, the geographical expanse of the country poses challenges in reaching every corner. Small-scale LNG emerges as a solution, bridging this gap and enabling customers to access the advantages of natural gas and facilitating a transition towards cleaner energy sources.

Rajesh K Mediratta, MD & CEO, Indian Gas Exchange said, "We envision IGX providing marketplaces for competition, flexibility and transparent price discovery. The introduction of ssLNG contracts is to fill the void in ssLNG space. With the demand for road-transported LNG projected to increase substantially over the coming years, our initiative will provide city gas distribution networks, industries & LNG dispensers a competitive gas pricing that will optimise their costs. By facilitating the trading of ssLNG contracts, we are not only enabling the efficient transportation of larger volumes of natural gas via trucks but also widening access to a cleaner fuel across the country."