MCX emerges as second largest Natural Gas Exchange globally

Kolkata, Sept 27 (UNI) MCX has emerged as the second largest Natural Gas Exchange globally, next to NYMEX.

The exchange launched its Natural Gas futures for trading on July 10, 2006.

Within two months of its launch, the traded lots have reached 5,46,150, which is 25 per cent of NYMEX volume.

The number of participants has also increased to 514 per day in August 2006 from 250 per day in July 2006.

Daily average turnover of natural gas futures at MCX platform has increased significantly to Rs 436.91 crores in August 2006 from Rs 103.30 crores in July 2006.

"In a scenario where gas supplies are increasingly becoming more inclined towards benchmarking domestic prices on the basis of international market, MCX has provided a platform to players in the gas ecosystem to hedge their price risk," said Mr Jignesh Shah, Managing Director and CEO, MCX.

"Natural gas demand in the country is expected at 166 metric million standard cubic meters (mmscmd) per day against domestic supply of 98 mmscmd, leaving a huge gap which needs to be filled with large imports at international rates," said Mr Rajesh Wagle, VP-commercial, Mahanagar Gas Limited (MGL).

Looking at the liquidity in the market, several distribution companies have started to look at the option of buying natural gas on the Henry Hub or crude oil price basis.

As Henry Hub natural gas and crude oil cushioning is the most recognised and established platform, increasing number of companies can now utilise these reference market, by using MCX natural gas and crude oil contracts.

As these energy commodities are highly volatile in nature, physical players are able to utilise MCX platform to hedge their price risk against high volatility.

India is currently importing natural gas from various origins and it is around 22 percent of the domestic consumption. This figure is likely to grow to 33 per cent by 2010-2011. Private sector supplies meet 27 per cent of domestic requirement and are expected to increase to 64 per cent by 2010-11.

UNI TJP JYN KLC1721