Red Alert: Gas marketers exploit loopholes in IGX, undermining India's gas pricing reform

NEW DELHI - July 17, 2025 - PRLog -- India's push toward market-discovered gas pricing is facing an unexpected internal threat. A detailed analysis by IndianPetroPlus reveals how gas marketers are using loopholes in the Indian Gas Exchange (IGX) system to manipulate trade flows, distort price indices, and crowd out genuine end-users — raising concerns over the integrity of the country's natural gas reforms.

The Exploitation Mechanism
Data from Q1 FY26 and June 2025 shows:

• 96% of IGX trades were Ex-Hub — allowing marketers to bypass delivery, pipeline scheduling, and traceability.
• Over 60% of volumes consisted of ceiling-price gas, which is regulated, not market-discovered.
• Gadimoga and Dahej hubs alone accounted for over 60% of all trades, enabling tax arbitrage and predictable trading cycles.

Marketers are essentially treating IGX like a speculative arena, leveraging physical gas only to back virtual trades. This goes against the foundational objective of transparent and competitive gas pricing in India.

Red Flags in Trade Patterns

• Circular transactions may have inflated trade counts (560+ in Q1), while only 4% were Delivered contracts.
• A surge in Ex-Hub volumes has allowed marketers to sell gas repeatedly without infrastructure exposure.
• Ceiling-price trades, though not reflective of demand-supply equilibrium, are influencing IGX pricing benchmarks like GIXI.

Regulatory Blind Spots
Despite being under the purview of the Petroleum and Natural Gas Regulatory Board (PNGRB), IGX lacks:

• Transparency in buyer-seller identities
• Hub-specific trade caps
• Segregation of regulated gas from free-market gas in its reporting

The current oversight framework doesn't track behavioral anomalies in real time, creating room for tactical arbitrage.

What's at Stake
If left unchecked, such practices can:

• Undermine small industrial buyers
• Distort pricing indices
• Erode investor confidence in India's gas reforms
• Artificially inflate trading volumes without corresponding physical delivery

Call for Reforms
The report recommends that IGX and PNGRB consider:

• Mandatory disclosure of buyer-seller identity at contract level
• Trade volume caps per hub
• Separate reporting for ceiling-price vs market-price gas
• Real-time audits of Ex-Hub contracts

"India's gas market is maturing, but its regulatory scaffolding must evolve just as fast," warns the IndianPetroPlus editorial team.

About IndianPetroPlus
IndianPetroPlus is India's leading independent intelligence service covering oil, gas, LNG, and petrochemical markets. With over two decades of industry-focused journalism, the platform is trusted by major stakeholders across the energy value chain.

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