India's Multi Commodity Exchange launched the country's first energy futures contracts yesterday, hoping to attract oil companies and investors but refiners said they prefered a mechanism to protect refining margins.

Oil futures have not been very successful in Asia but officials from the Mumbai-based exchange said they were enthused by the response.

"In the first hour of trading we saw a turnover of Rs60 million ($1.37 million, Dh5.02 million). This is very encouraging and it is bound to grow," Anjani Sinha, chief executive officer of the exchange, told reporters.

Refining margin

The exchange which already offers futures trade in agri-commodities, bullion and metals launched monthly contracts for light, sweet crude with trading lots of 100 barrels and hopes to add more energy products as trade picks up.

M.S. Ramachandran, the chairman of the country's largest refiner, Indian Oil Corp, said he welcomed the new contract but said Indian companies wanted instruments to lock refining margins.

"It is a welcome development. What matters most to the refiners is the refining margin. It has fluctuated a lot. Either it has been dramatically high or very low," Ramachandran said.

Ramachandran said large Indian customers such as state transport companies, railways and the defence forces would also want to hedge the risk of fluctuating prices of refined products.

India is a key energy consumer as its economy grows and it looks to export value-added fuel products. The country produces about 660,000 barrels a day of crude a year, which meets only 30 per cent of its requirements.

The exchange has spoken to IOC, Oil and Natural Gas Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp, who are expected to trade along with a community of nearly 800 brokers.

Meanwhile, the Indian cabinet authorised the Oil Ministry yesterday to negotiate with Iran, Myanmar Pakistan, Bangladesh and Turkmenistan for building pipelines to import natural gas, a government statement said yesterday.

India produces only half the natural gas it uses and analysts say large transnational pipelines will be viable in the region only if gas reaches its vast market.

The government said imports of natural gas were necessary to sustain the expected 7-8 per cent annual economic growth.

"It is imperative to look for cost-effective and long-term arrangements to meet our energy requirements. Natural gas is the most economic, efficient and environment-friendly fuel," it said.

Oil ministry officials said the cabinet's decision would enable the Oil Ministry to directly negotiate pipeline deals instead of depending entirely on the Foreign Ministry.

India recently signed an agreement to import natural gas from Myanmar via Bangladesh and said a panel would be set up to work out the details such as the route of the pipeline and the price of the gas.

It is also in talks with Iran to build a pipeline across Pakistani territory.

"Implementation of these proposals would reduce the large deficit between the demand and supply of natural gas and would increase energy security in terms of availability as well as affordability," the statement said.

The $4 billion (Dh14.68 billion) gas pipeline from Iran via Pakistan to import gas had been proposed for meeting the growing energy needs of Asia's fourth-largest economy.

Pakistan, which stands to earn millions of dollars in transit fees, has been keen on the project for years, but plans have made little headway because of political tensions with India.

India started importing liquefied natural gas (LNG) from Qatar last year and recently signed a contract to import 7.5 million tonnes a year from Iran starting in 2009.

Mumbai (Reuters) Chevron Phillips is in talks to license poly-ethylene technology to companies in India's growing petrochemicals industry, and said yesterday it hoped to strike deals soon.

"We are actively pursuing licences for technology ... There is a focus on India because of many good opportunities here," Mitchell Eichelberger, its global director of licensing, told reporters in Mumbai, though he did not divulge names.

"We are hopeful (of getting big deals). There is potential. That's why I am here," Eichelberger said after making a presentation at a chemicals seminar.

Top energy companies including Oil and Natural Gas Corp, GAIL (India) Ltd, and Indian Oil Corp have announced aggressive investments in petrochemicals.

Polyethylene is the most common plastic worldwide, used to make products including grocery bags, toys and food packaging. India's strong growth would result in a dramatic rise in polyethylene consumption, as seen in China, Eichelberger said.