Volatility in global LNG prices, coupled with difficulties in sourcing gas, led to a fall in profit of Petronet, India’s largest LNG importer, to Rs 744 crore in the second quarter of FY23 from Rs 824 crore in the year-ago period.
The company, a joint venture of state owned oil Bharat Petroleum, IOCL, ONGC, and GAIL, argued it was able to achieve robust financial results despite high LNG prices owing to the optimisation in its operation.
Petronet LNG reported its highest-ever turnover of Rs 15,986 crore in the current quarter, against Rs 10,813 crore the same period a year ago. Due to foreign exchange volatility, the company suffered a foreign exchange loss of Rs 98 crore based on its lease liability.
In a post-result call, Petronet LNG Managing Director and Chief Executive Officer Akshay Kumar Singh said the company was expanding capacity by 9 million tonnes (mt), including at its LNG terminal at Dahej in Gujarat. Dahej is the largest single location LNG storage and regasification terminal in the country and is currently running at upwards of 90 per cent capacity. Singh said the global volatility had not dented the company’s future plans.
“Usually, greenfield projects in the sector cost Rs 5,500-6,000 crore. But in our case, it has been done at a cost of Rs 500-600 crore, or at less than 10 per cent of the actual cost,” he said.
They added that LNG spot prices are expected to cool over the next few months as European nations have almost completed stocking up for the winter. Up to 95 per cent of their targeted storage levels have been met, they added. The long-term prices at Dahej are $12.8 and $13.16 at the company’s LNG terminal at Kochi, they said, arguing the purchase situation would only be better once spent prices come down to these long term levels.
According to Petronet, India’s LNG imports are expected to hit 23-24 mt if global prices continue cooling. Imports have historically been around 26 mt, but had reduced to 24 mt last year.
Singh said India should have a mix of long- and short-term purchase agreements to better balance cost and supplies. “Long-term agreements could be 75-80 per cent of purchases, with the remaining being negotiated through short term agreements,” he said.