India’s natural gas sector will see more market-friendly reforms which will help create a trading hub in the country, Oil Minister Dharmendra Pradhan told a gathering of investors at the 22nd World Petroleum Congress in Istanbul, Turkey.
“We are in the process of reforming the gas market in India where you can sell your gas through a gas trading hub,” said Pradhan.
ET had reported on June 15 that the government was working on a plan to build a natural gas trading hub that could aid better price discovery for domestic as well as imported gas, and could eventually become Asia’s pricing hub competing with Singapore, Shanghai or Tokyo.
India is the 4th biggest liquefied natural gas (LNG) importer in the world, sourcing nearly half of its gas requirements from overseas.
Rates of most of its long-term LNG contracts are linked to crude oil and those of domestic gas decided by the government-set formula. A market-driven pricing is considered necessary for the domestic market to mature, and a local trading platform could help in that.
An electronic trading platform is expected to be ready by early 2018 which will allow only physical trading, according to people familiar with the plan.
The country has four LNG terminals with a combined capacity of 27 million tonnes per annum. The capacity is expected to rise to 47.5 million tonnes by 2022. The gas pipeline network is also expected to double to 30,000 km in the next few years.
Pradhan also invited investors to participate in the country’s exploration and production sector, where a new policy allows companies the freedom to carve their own blocks, use just one licence to exploit all forms of hydrocarbons, and the liberty to price their gas.
“We have opened up 2.8 million sq km of area for your investment, and I extend the commitment of the government of Prime Minister Modi that you will receive a red carpet welcome if you decide to invest in it,” Pradhan said.
The rising middle class of emerging Asian countries like India will drive the demand for energy both in terms of electricity and cooking and transportation fuel, Pradhan said, adding that India is the only country where the demand will continue to rise for more than a decade.
The minister said that in the current oversupplied market, it is important for producers to understand the perspective of consumers and demand centres and the changes that have taken place in these demand centres.
Pradhan held bilateral talks with Turkish Energy Minister Berat Albayrak, discussing issues of bilateral energy cooperation, including in renewable energy.