It is welcome that the Centre has decided to revamp market design for natural gas, to better match supply with demand and bring about price efficiency as well. Petroleum and natural gas minister Dharmendra Pradhan says India would soon build a natural gas trading platform. It would boost transparency in gas pricing, and better allocate resources for pipelines and attendant infrastructure.

There is a case for stepping up gas usage in our energy mix, from 6-7 per cent of commercial energy now, much lower than the global average of 24 per cent. And in rapidly urbanising India, we need to boost gas supplies to provide peaking power, piped cooking gas, reduce harmful emissions in transportation and also advance manufacturing. Note that gas consumption nationally rose to 55.5 billion cubic metres (BCM) in 2016-17, with almost 31BCM domestic gas output and nearly 25 BCM liquefied natural gas (LNG) imports. In the short-to-medium term, there’s much scope to raise LNG imports.

In this context, the Cabinet nod for a pact with Japan to swap LNG supplies, so as to save on logistics and transportation, makes eminent sense. Japan is the largest importer of LNG and India is the fourth largest, and it is logical to swap supplies from LNG sources that are closer to each nation. For instance, India can offer its share of supplies from Australia to Japan and, in turn, take the latter’s share from Qatar to save on shipping and transportation costs.

The pact with Japan would also seek to establish reliable spot LNG price indices reflecting true demand and supply. In tandem, a policy of “open access” to LNG terminals and pipelines would incentivise investment. Meanwhile, India’s new exploration policy that offers market-determined gas prices has reportedly led to 45 expressions of interest from oil majors.