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India to develop gas trading exchange for transparent price: minister

New Delhi (Platts)--11 Oct 2017 452 am EDT/852 GMT


India plans to set up a gas trading exchange to ensure a uniform pricing mechanism to promote a gas-based economy in the world's third-largest energy consumer, Oil Minister Dharmendra Pradhan said Tuesday.

The minister said the ministry would prepare a detailed note for the consideration of the cabinet, led by Prime Minister Narendra Modi.

"A cabinet note will be prepared soon outlining details of the gas trading exchange," Pradhan told reporters at the India Energy Forum.

Pradhan said the current mechanism in which the government fixes gas prices would continue for priority sectors during a transition period.

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"Our idea is to gradually switch to a market-linked transparent gas pricing mechanism by strengthening the proposed gas trading exchange," he said.

The minister said the share of gas in the country's energy basket stood at just 6-7% compared with a global rate of 24%.

Pradhan said Gujarat has achieved a 26% share of gas in the western state's overall energy basket by adopting investor-friendly transparent policies that need to be replicated at a national level.

"We have to put in place a uniform market pricing mechanism to promote a gas-based economy," the minister said.

A think tank has been set up comprising energy finance experts to advise the government on issues related to the hydrocarbon sector, including the proposed gas exchange, he said.


INVESTMENT FOCUS


Pradhan said India needs investment of around $300 billion in the energy sector, including oil and gas, over the next 10 years to raise the per capita energy consumption level and cut crude imports.

India's per capita energy consumption is currently 0.55 mt of oil equivalent compared with a global average of 1.9 mtoe.

India aims to cut its dependence on imported crude to 67% in fiscal 2021-22 (April-March) from 77% in March 2015 by focusing on domestic production.

To meet growing demand for oil and oil products, the minister said India would need to raise its current refining capacity of 235 million mt/year to around 500 million mt by 2040.

"Our strategy is to achieve the higher refining target through both greenfield and brownfield expansions," the minister said.

By 2024-25, India aims to add 120 million mt refining capacity, Pradhan said, adding that 58% of this capacity would be achieved by setting up new refining capacities while the remaining 42% would be achieved by strengthening existing refineries.

The minister said India's oil ministry has decided to turn the India Energy Forum into an annual flagship event to attract global investors in oil and gas.

--Ratnajyoti Dutta, newsdesk@spglobal.com
--Edited by Jonathan Fox, jonathan.fox@spglobal.com




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