Petronet wants RasGas to review LNG contract
Petronet LNG, India’s leading gas importer, is in discussions with Qatar’s RasGas to tweak a decade-old liquefied natural gas (LNG) procurement deal.
Petronet LNG, India’s leading gas importer, is in discussions with Qatar’s RasGas to tweak a decade-old LNG procurement deal. The Indian firm has been forced to cut down gas volumes from Qatar after the price of fuel bought through this long-term contract has become almost double the spot prices.
“We are working out a solution. This is a global phenomenon,” said Prabhat Singh, managing director and CEO of Petronet LNG. He, however, did not disclose whether India is re-negotiating the volumes or the price. “Let the nation win,” Singh added.
Petronet LNG has a contract to buy 7.5 million tonnes of LNG from Rasgas every year. Of this, GAIL (India) is liable to take 60% on take-or-pay basis. The pricing of this gas is linked to 60-month average of crude oil prices. At present, the LNG through this route costs around $12.67/mBtu at India’s west coast, excluding other charges such as re-gassificiation, transportation, marketing margin and state levies. On the other hand, spot cargoes are available at nearly half the price at $6-6.5/mBtu. Since, gas procured from Qatar is expensive, GAIL is not finding buyers for it and forced to utilise it at its petrochemical plant, thus further hurting its revenues.
Singh said that in the first nine months (January-September), Petronet has procured 68% of the gas available under the deal from RasGas. “We donot take 33 out of 120 cargoes,” he said.
Meanwhile, even after less procurement from Qatar, Petronet has seen its capacity utilisation at Dahej LNG terminal going upto 120% during the second quarter of FY16. A part of the gas has been sold to power plants, where government has put in place a pooling mechanism to lease out the stranded units. The Union government has proposed to procure around 14 mmscmd (million metric standard cubic metres per day) of LNG to feed the gas-based plants under the new subsidy scheme.
Currently, Petronet is supplying about 8-9 mmscmd to the power sector. This is expected to rise to 18-19 mmscmd after both power and fertilizer sector starts buying LNG under the pooling mechanism, said Singh.
On Monday, Petronet reported a net profit of Rs 248.85 crore for the quarter ended September 30, 2015 against to Rs 262.81 crore in the same quarter previous year. During the quarter, the company’s net revenue decreased 31.2% to Rs 7,544.97 crore from Rs 10,979.96 crore in the same quarter last year.