Not a pipe dream: Govt to set up national gas hub


  1. In what could transform the pricing scenario of domestic natural gas in India, the Narendra Modi-led government is to come up with a national gas hub, which would be a trading platform for gas at market-determined price.
  2. If the idea gets cleared, India will also have a gas-trading place similar to international hubs such as US’ Henry Hub and UK’s National Balancing Point.
  3. While Henry Hub is a physical point where several gas pipelines come together, National Balancing Point is a virtual trading point.
  4. At present, the Indian domestic natural gas price is calculated on a half-yearly basis, based on a weighted average of Henry Hub, National Balancing Point, Russian gas and Canada’s Alberta Gas.
  5. The idea is floating around in its initial stages but as a country, we’ve minimal amount of gas available. Moreover, the country has only three major producers. To set up a hub, we need both active producers and consumers in the market.
  6.  Currently, gas is bought based on hub pricing in European countries. Virtual model of gas hub was followed by various countries- Belgium (Zeebrugge), Netherlands (TTF), France (PEGs), Germany (NCG and GPL) and Italy (PSV).
  7. This is a huge positive for upstream companies in India as prices will be marketdriven. Moreover, domestic natural gas pricing will be uniform with move.
  8. India has only 0.8 per cent of the global gas reserves and 0.5 per cent of the global oil reserves. This is good enough for us to meet demand for a few years.
  9. Recently, the government had invited bids for auction of 67 discovered small oil & gas fields that were given up by state-owned Oil & Natural Gas Corporation and Oil India.