Petronet LNG Volumes Continue To Surprise; Utilisation Rate Back To Pre-Covid-19 Levels
In Q1 FY21, Petronet LNG Ltd.’s better-than-estimated volumes at 190 trillion British thermal units (up 5% versus estimate), led to marginal Ebitda beat at Rs 9 billion. The company has given an update on its current operations, highlighting that post lifting of the lockdown, regasified liquefied natural gas demand has recovered gradually. Since the first week of June 2020: a) Dahej terminal is operating at 100% capacity of 17.5 million metric tonne per annum (63 million metric standard cubic meter per day versus January-February 2020 average of 92% capacity of approximately 58 mmscmd) b) Kochi terminal is operating at 20% capacity of approximately 3.57 mmscmd. Various power plants are switching off coal due to the current lower spot gas price environment, resulting in higher gas offtake and imports. Negotiations with Qatar Gas over liquefied natural gas pricing are ongoing. Petronet LNG has indicated that a final decision on the memorandum of understanding with Tellurian Inc. could be reached in FY21.
Italian energy utility Snam plans to enter India gas market
Italian energy utility Snam plans to set its foot in India’s gas infrastructure space as the country intends to raise the share of gas in its energy basket The company’s CEO recently had a discussion with petroleum Dharmendra Pradhan regarding collaborations in the areas of liquefied natural gas (LNG), gas storage and hydrogen fuel. Responding to FE’s queries, Snam said “the significant push towards cleaner energy shift and in particular towards gas is what makes India an interesting market,” adding that “we look forward to opening soon our office in India to enhance the dialogue and cooperation with Indian partners that we have developed over the past couple of years Snam wants to tap the relatively nascent market of gas for transportation and utilise its technology and equipment for CNG or liquefied-CNG refuelling stations. Over 31% of SNAM’s shares are held by holding company CDP Reti, which is a joint venture between Italy’s state-run Cassa Depositi e Prestiti (CDP) and the State Grid Corporation of China. FE’s email to the ministry of petroleum and natural gas asking whether the government’s current anti-China stance will be a problem for Snam’s potential investments in the country remain unanswered. The management of Snam is Italian and is proposed by CDP and the Italian government. “There is no influence by other shareholders on any of Snam investment decisions or strategy and therefore we don’t see any issue,” Snam told FE. India aims to increase the share of natural gas in its energy mix to 15% by 2030 from the current level of about 6%. Demand for natural gas in the domestic market is largely dependent on the fertiliser (28%), power (23%), city gas distribution entities (16%), refinery (12%) and petchems (8%).
Investments in LNG not looking lucrative at this point of time: Petronet LNG
According to Prabhat Singh, Managing Director and CEO of Petronet LNG Limited, the investments in the Liquefied Natural Gas (LNG) market are not looking very lucrative. He was responding to a query on the status of the deal between Petronet LNG Limited (PLL) and US-based LNG developer Tellurian Inc. “We are exploring the market. But one thing is sure that investments as such are not looking lucrative at this point of time. To that extent, if you are getting a molecule floating on the water which is very cheap, which we are getting at this point of time, so those are the options which are on top priority today and we are working around that,” Singh told journalists. Earlier this year, a deal was renewed between PLL and Tellurian to finalise an investment in Tellurian’s Driftwood export project in Louisiana, USA. This deal is said to be relooked in light of the fall in global natural gas and crude oil prices. PLL and Tellurian had signed a non-binding memorandum of understanding under which PLL would buy 5 million tonne per annum LNG from Tellurian’s Driftwood project. PLL was also expected to invest $2.5 billion for an 18 per cent equity stake in the $28-billion Driftwood LNG terminal. Commenting on the price outlook for LNG, Singh said, “The time has come now that producers have to come to the consumer’s level of thought. The priority of producers is to place the molecule in the market. Price comes secondary and therefore most of the guys are looking for a daily pricing benchmark which is a dream come true for consumers.” According to Singh, LNG prices in the spot market are hovering close to $3 per million British thermal units (mBtu). Under longer term contracts, the prices are around $4.5-5.5 per mBtu. “In my opinion, the prices are expected to remain in this range… The days of $10 per mBtu gas price are over now,” he said. Singh estimates that spot LNG price would easily remain below $6 per mBtu for the rest of the current financial year.