Petronet exploring long-term LNG deal indexed to spot prices

Petronet LNG, India’s largest natural gas importer, said its business has quickly recovered from the lockdown lows and both its regasification terminals are operating at their highest rate.

“As of today, both our terminals at Dahej and Kochhi are drawing the highest. It's a V kind of rebound, which has happened,” said Petronet LNG CEO Prabhat Singh.

Petronet’s LNG regasification terminal at Dahej in Gujarat is operating at more than 100% capacity. It has a nameplate capacity of 17.5 million tonnes per year. Another terminal at Kochhi, which has 5 million tonnes a year capacity, usually operates at a very low capacity due to the absence of pipeline connecting customers. During lockdown, capacity utilisation had fallen to about two-thirds at Dahej for some days.


Petronet is also looking to enter into a long-term contract for the purchase of one million tonnes a year of LNG with prices indexed to spot rates, Singh said, adding that a deal would be closed soon.

A global supply glut and a pandemic-induced demand destruction have caused a price collapse in the spot market and LNG is now available for around $2 per mmBtu.

Petronet is also currently holding discussions with Qatar on reopening their long-term LNG purchase deal to bring down prices, Singh said. The LNG imported from Qatar is linked to crude oil rates and is currently priced around $3.5-$4.5 per mmBtu.

Petronet LNG reported a 18% drop in profit to Rs 359 crore in the fourth quarter against Rs 440 crore in the year-ago quarter on lower volumes. Revenue fell 4% to Rs 8653 crore.

The profit rose 25% to Rs 2,698 Cr in 2019-20. Annual revenue, however, fell 8% to Rs 35,824 crore.

The overall LNG volume processed by the company in the Jan-March quarter was 219 thousand British thermal units (TBTU), as against 205 TBTU in the year-ago period.