Petronet LNG

The company did not have a good Q1FY14. YoY, it reported a 17% drop in  net profit at Rs.225 crore. Net revenue, YoY rose 20% at Rs.8377 crore but sequentially, it was flat. YoY increase in turnover was due to increased price of LNG under the long term contract. Total operating cost, as a percentage of total revenue earned was at 96% in current Q1 compared to 94% in previous Q1. Margins were thus affected – OPM came in at 4.89% v/s 6.88%  and NPM also fell from 3.85% to 2.67% (YoY).

Petronet's Dahej LNG import and regasification terminal processed 129.5 trillion British thermal units of gas in Q1 as against a volume of 127.17 trillion British thermal units in the corresponding quarter last year. The company’s second terminal at Kochi in Kerala will be commissioned next month, after it gets the first instalment of gas by August 15 from Ras Gas of Qatar, which will officially mark the start of its commercial operations. But the woeful part is that the terminal is not expected to run beyond a 7-8% capacity in first year as it neither has customers nor the pipeline to to carry the fuel to Karnataka and Tamil Nadu, which is to be put up by GAIL. Till then, it is expected to be sold to a few handful local power companies and to BPCL’s Kochi plant. This situation is expected to ease only by 2015. Petronet is going in for forward integration to overcome this glut and has got the approval to set up a 1200 megawatt (MW) power plant in Kochi to be commissioned in three phases of 400 mw each. But the first phase is expected to come up only by 2015. Lack of infrastructure build is causing a bottleneck for a healthy company like Petronet, which otherwise has approvals to expand its 10 mtpa Dahej LNG terminal to 15 mtpa by 2015. It is also looking at another 5 mtpa in two phases which will make Petronet’s Dahej terminal the biggest in the world.

Meanwhile, Petronet LNG is in talks to offer up to 18% stake in its Gangavaram terminal project to a strategic partner. Petronet has 74% stake in the terminal while Gangavaram port has 8% stake and it is looking at a producer of supplier of gas and many companies are said to have evinced interest. The company plans to build a 5 million tonne a year LNG terminal at Gangavaram in the east coast by 2016.