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India to become Global Trading Hub for Natural Gas

India City Gas Distribution Market

Oil and Gas | Sep, 2017

A report from leading global market research company TechSci Research states that natural gas consumption in India city gas distribution market is slated to cross 18 BCM in the next 12-13 years. The report “India City Gas Distribution Market By Type (PNG &CNG), By CGD Allocation, Competition Forecast & Opportunities, 2013 – 2030” carries the key statistics about the natural gas market in India.

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What drives natural gas market in India?

The key drivers for the natural gas market in India include the following:

·        Favourable policy environment from the government of India

·         Staggering demand from industries, especially commercial and automotive segments

·         Increasing participation of private corporate houses in the natural gas market in India

·         Thriving demand from end use segments

·         Burgeoning population especially the rise of a gigantic middle class population that has the power to drive growth in several industries

Key initiatives on the policy front

The government of India has taken a number of steps to boost the natural gas market in India. Of late, the government announced that it will set up a natural gas trading hub in the country. This will enable transparent trading of gas and companies can strike out better balance, both from domestic and imports perspectives.

Once this natural gas trading hub is established, India will become a vibrant natural gas market just like Tokyo, Shanghai and Singapore. This initiative will also enhance country’s reputation in the global market, on account of its pursuance with best practices that are transparent and business friendly.

Currently, the prices of gas products in India, including fuels such as petrol and diesel, are set by the government. The same applies on natural gas as well.

Advent of a trading hub will ensure that the prices are rather set by the market forces themselves. This will take all the dynamic factors that influence the demand and supply of natural gas into account.

 If media reports are to be believed, the natural gas exchange will be set up in India by early next year. The trading hub will allow only physical trading and would not go for online trading, as per government reports. This will also help in ruling out the chances of unnecessary speculation.

Declining reliance on natural gas imports

In the recent past, India has observed a gradual rise in the domestic production of natural gas, thereby reducing its reliance on imports. In June 2017, the country registered a growth of 6 per cent in natural gas production.

The spurt in natural gas production was driven by country’s energy bellwether ONGC (Oil and Natural Gas Corporation), while Oil India too reported growth of over 5 per cent in its natural gas production during the month. With these encouraging numbers, India reduced its imports by around 4 per cent in June 2017.

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