The key players and stakeholders in the city gas distribution sector have given their views and comments on the draft Petroleum and Natural Gas Regulatory Board (Gas Exchange) Amendment Regulation, 2022.
India Gas Solutions Private Limited
India Gas Solutions supports the creation/declaration of regional gas hubs and various delivery points within the gas hubs. In addition to this, the company also supports the proposed amendment in the definition of Gas Hub and Delivery Point in the Gas Exchange Regulations and Market Rules and the designation of Mhaskal, Ankot, and Bhadbhut as New Delivery Points. Moreover, the addition of these new delivery points is expected to avoid duplication of transportation charges as KG Basin gas sellers are to be directly connected to northern, western, and southern gas buyers, and this will assist in increasing liquidity at the exchange. Furthermore, India Gas Solutions Private Limited also requests the implementation of the Unified Pipeline Tariff (UPT) regulation at the earliest in order to provide a level playing to all participants across the country.
GAIL (India) Limited
GAIL (India) Limited proposes to change the definition of gas hubs from single points to regions. The company believes that there is no difference in treating natural gas based on the clarification proposed – neither in terms of tax treatment nor in terms of pipeline tariffs. Further, GAIL (India) Limited states that the creation of new delivery points viz, Ankot, Bhadbhut, and Mhaskal seems justified.
Pipeline Infrastructure Limited
Pipeline Infrastructure Limited did not add a specific comment concerning the aforementioned amendment but the company has been keen on participating in Open House discussions scheduled on April 5, 2022, to be conducted by Petroleum and Natural Gas Regulatory Board (PNGRB).
Shell Energy India Private Limited
Shell Energy India Private Limited supports the idea of having a limited number of hubs with a focus on enhancing liquidity at the exchange, resulting in more robust gas price discovery at the gas hub level. However, the company has put forward a request for exploring an option wherein buyers, as well as sellers, can submit bids at multiple delivery points from where gas can be supplied and off taken, respectively. Shell Energy India Private Limited also recommends the implementation of a uniform pipeline tariff for allowing consolidation at the regional hubs where buyers within the same zone can be grouped for single price discovery.
Gujarat State Petronet Limited
According to Gujarat State Petronet Limited, proposed as well as future delivery points should be aligned with the respective transporter’s delivery and redelivery nomenclature. In addition to this, the company suggests the provision of options for other financial instruments like letters of credit, bank guarantees (BG), etc. in order to avoid blockage of working capital for long periods, and for risk management mechanism, provision of submitting BG/Letter of Credit instead of cash collection may be deliberated upon. Gujarat State Petronet Limited also states that as per the suggested mechanism for ceiling priced gas, the allocated volume could be as low as 50 mmbtu per day.
Prabha Energy Private Limited
Prabha Energy Private Limited believes that the amendment is a forward-looking step undertaken by PNGRB since it provides support for accessing gas from new domestic sources to customers all over the country in the most efficient manner, and thus has requested PNGRB to consider this favourably for promoting the usage of domestic gas with the help of this initiative.
Oil and Natural Gas Corporation Limited (ONGC)
According to ONGC, an option to sell gas in the exchange will not only enhance production in fields but will also play a crucial role in ensuring an efficient and fair price discovery mechanism for producers like ONGC. As per ONGC, PNGRB can consider the provision of a separate approval related to the ceiling price contracts on a fast track basis so as to commence trading gas from its freedom fields of Offshore Asset(s) at the earliest. It also suggests reconsidering a separate delivery point wherein the majority of ONGC gas from its Eastern Offshore Asset, subject to ceiling price, is being delivered.
H Energy has supportingly welcomed the proposal submitted by the Indian Gas Exchange, stating that the creation of multiple delivery points and regional hubs will be providing ease and flexibility to the gas customers. This will happen due to a reduction in transportation tariffs along with encouraging supply competition. In addition to these, better market access will also play a crucial role along with the aforementioned factors in the expansion of the gas market in the country.India Gas Solution Private Limited Shell Energy India Private Limited Prabha Energy Private Limited