India's top natural gas marketer GAIL has opposed the Indian Gas Exchange's (IGX) proposed platform for booking capacity at LNG import terminals, according to reports from The Economic Times. The company stated that such a platform would add costs for gas consumers while offering limited incremental value. IGX has proposed acting as a facilitator for regasification capacity bookings at LNG terminals, without getting involved in contractual negotiations or payment settlements.
GAIL emphasized that imposing an artificial layer of transaction costs for a service that does not streamline the fundamental contractual process will unjustifiably increase the financial burden on end-users, as reported by The Economic Times. The company noted that downstream natural gas consumers are already facing significant margin pressures due to high and volatile global LNG spot prices. GAIL, which operates an LNG terminal on India's western coast, stated that information asymmetry has not been a significant barrier to participation by terminal users.
GAIL highlighted that more than half of India's LNG regasification capacity of around 57.5 million tonnes per annum remains underutilised due to weak domestic gas demand, according to The Economic Times. The company argued that under these circumstances, a booking platform is unlikely to lead to any meaningful increase in capacity utilisation. GAIL and other stakeholders submitted their views as part of the Petroleum and Natural Gas Regulatory Board's (PNGRB) consultation on the proposal.
GAIL stated that no significant inefficiencies in the existing framework have been observed that necessitate creation of a separate booking platform, as reported by The Economic Times. The company believes that existing frameworks do not require a separate booking platform, arguing that the proposed platform would not provide sufficient value to justify the additional costs for consumers. This assessment comes as the company faces challenges from high global LNG prices affecting downstream natural gas consumers.
