MCX in talks with GSPC for spot energy exchange

The Multi Commodity Exchange of India (MCX) is exploring the possibility of setting up a national spot exchange for trading in energy products, such as natural gas and crude oil. The exchange has already initiated talks with the Gujarat State Petroleum Corporation (GSPC).

MCX is likely to hold 51 per cent stake in the new exchange. GSPC, on the other hand, may hold about 26 per cent stake, sources close to the development told Business Standard. The remaining equity would be offered to some strategic partners, including technology companies.

A senior official of GSPC confirmed that they had held preliminary discussions with MCX. However, some infrastructure problems prevail which could prove to be a roadblock for the spot exchange, sources close to the development said.

"The delivery requirements for natural gas are yet to take shape in the country. A national grid has to be in place for setting up the exchange," sources said.

MCX launched forward contracts in natural gas in 2006. "The need for a spot exchange was felt among players who trade in natural gas and oil on the MCX platform. However, the readiness in infrastructure is required," said a MCX official.

He said that the companies have been in talks with various oil and gas players who are using the MCX platform and have even approached GSPC in this regard.

The proposed exchange will also involve trading in LNG and CNG. Unlike crude oil, natural gas has no global price benchmarks. GSPC is engaged in maximising the usage of natural gas as fuel.

The company is planning a public offer to part-finance the proposed development of GSPC's Deendayal gas field (KG-OSN-2001/3) in KG Basin.

GSPC had earlier claimed to have tasted success in appraisal drilling for the development of KG-8 gas discovery during September-October 2007.