GAIL opposes IGX for LNG terminal capacity booking

India's leading natural gas trader GAIL has expressed opposition to the Indian Gas Exchange's (IGX) plan to create a platform for booking capacity at LNG import terminals. GAIL contends that such a booking platform would increase costs for gas consumers while providing minimal added value. IGX proposes acting as a facilitator for regasification capacity bookings at LNG terminals, without engaging in contractual negotiations or payment settlements.

However, GAIL and other stakeholders have submitted their opinions as part of the Petroleum and Natural Gas Regulatory Board's (PNGRB) consultation on the proposal.

GAIL argues that imposing artificial transaction costs for a service that does not simplify the fundamental contractual process will unduly raise financial burdens on end-users. Downstream natural gas consumers are already encountering substantial margin pressures due to high and volatile global LNG spot prices. GAIL also states that information asymmetry has not been a significant obstacle to terminal users' participation.

Moreover, no major inefficiencies have been identified in the current framework that would warrant the establishment of a separate booking platform.

Approximately 57.5 million tonnes per annum of India's LNG regasification capacity remains underutilized due to weak domestic gas demand. In light of this situation, GAIL asserts that a booking platform is unlikely to result in a meaningful increase in capacity utilization.