LNG imports surge 10.8% in October as domestic gas output falls by 1.6%
India’s natural gas landscape in October 2024 reflected a mixed bag of growth and challenges, with liquefied natural gas (LNG) imports rising sharply by 10.8% year-on-year to 2941 million standard cubic meters (MMSCM), while domestic production fell by 1.6% to 3111 MMSCM. The latest report from the Petroleum Planning & Analysis Cell (PPAC) highlights the country’s increasing reliance on imported LNG to meet burgeoning energy demands, as domestic output struggles to keep pace. Total natural gas available for sale in October stood at 5527 MMSCM, marking a 4.2% increase compared to the same month last year. However, consumption marginally dipped to 6019 MMSCM in October 2024 from September’s levels, underscoring uneven sectoral demand. Fertilizers accounted for the largest share at 29%, followed by city gas distribution (CGD) at 21%, and power generation at 11%. Refineries and petrochemicals collectively consumed 12% of the total gas available. (Source: Economic Times) UBS Upgrades Petronet To ‘Buy’ On India’s Rising LNG Demand UBS has upgraded Petronet LNG Ltd. to ‘buy’, raising the target price for the stock to Rs 400 from Rs 320, citing benefits for the company in meeting India’s growing LNG demand. The target price implies a significant upside as Petronet is strategically positioned to benefit from India’s rising LNG dependence, UBS said. Demand is set to grow at 5.6% CAGR over the next three years, outpacing domestic gas output growth at 1.8% CAGR, the brokerage said in a recent note. Petronet has secured five long-term LNG supply contracts starting from 2026, adding 4.2 MMTPA, a 20% jump from current levels as per the report. Around 80–85% of incremental gas demand over the next three years expected to be met through imports, stated UBS. Liquified natural gas imports into India are expected to increase by around 11 MMTPA over the fiscal 2024 to 2028. Petronet could cater for half of these incremental imports, the brokerage said. UBS has based its expectations on expansion of the company’s Dahej terminal from 17.5 MMTPA to 22.5 MMTPA by March 2025, and improved pipeline connectivity of its Kochi terminal by mid-2025. Delay in commissioning and ramp-up of competitive terminals in Dabhol and Chhara is also likely to aid the company, UBS noted. Expansion of the Dahej facility and use-or-pay agreements for new capacity showcase strong earnings visibility, said UBS. Terminal growth rates were increased by 1%, factoring in 3–4% free cash flow growth in later years. With price-to-earnings ratio for fiscal 2026 at 13.6 times, valuations remain attractive, trading at a 15% discount to the historical average, added the brokerage. Revenues are projected to reach Rs 788 billion by financial year 2029, supported by higher LNG import volumes. UBS expects Petronet’s EBIT margins to remain robust, even as aggressive capex is spread over the next four years. Dividend payout remains steady due to strong cash flow from operations.
India Removes Windfall Profit Tax On Crude Oil And Fuel Exports To Boost Energy Sector
The Centre on Monday eliminated the windfall profit tax that had been in place for 30 months on domestically-produced crude oil and fuel exports. Minister of State for finance Pankaj Chaudhary tabled a notification in the Rajya Sabha about the decision of removing tax on crude oil produced by companies like ONGC and fuel exports by firms such as Reliance Industries Ltd The notification cancelled the June 30, 2022 order and removed the special additional excise duty (SAED) on crude oil production and fuel exports, including aviation turbine fuel (ATF), diesel and petrol. Additionally, the government withdrew the road and infrastructure cess (RIC) previously imposed on petrol and diesel exports. On July 1, 2022, India implemented windfall profit taxes, joining other nations in taxing extraordinary profits of energy companies. Initially, export duties were set at Rs 6 per litre for petrol and ATF, and Rs 13 per litre for diesel. A domestic crude production tax of Rs 23,250 per tonne was also established.