Petronet LNG reports consolidated profit of Rs 670.06 cr for June quarter

The company is betting on plateauing domestic production and possible LNG demand from tyhe transport segment

Petronet LNG reported a consolidated profit of Rs 670.06 crore for Q1FY22. This is 34 per cent higher than the Rs 499.79 crore reported in the corresponding period last year.

The consolidated total revenue during the period under review stood at Rs 8,666.47 crore, up from Rs 4,951.95 crore in the same period of Q1FY21.

Petronet LNG’s earnings have moved in tandem with the opening up of the economy, and gas demand recovery, as Coronavirus (Covid-19) restrictions have eased.

Spot LNG prices had reached record high levels during January 2021 touching $32.50 per million British thermal units (mBtu). The prices have tempered since, but are back to around $16 per mBtu for deliveries bound for India.

Commenting on the impact on LNG demand as prices move, Akshay Kumar Singh, MD and CEO of Petronet LNG said, “The major impact of price hike is seen in the power sector. There is not much impact where LNG is replacing liquid fuel. In the power sector, LNG competes with solar, wind, thermal. That is where the stress and price sensitivity comes. A large amount of LNG is being used in the fertiliser sector (where demand is constant).”

Responding to a query on whether higher domestic demand hampers prospects for Petronet LNG, a company predominantly into regasifiying and importing natural gas, Singh said, “The increased domestic gas production is not going to sustain for a long period. New deepwater gas that is coming onstream will last for six to seven years. LNG demand is going to grow.”

“Another new area is the utility of LNG in the transport sector. We foresee diesel being replaced with LNG for long distance transport trucks,” Singh added.

Elaborating on the outlook for LNG as a transport fuel, he said, “We will need at least 3000 LNG stations in the country to offset 10 per cent diesel demand (this comes to around 9 million tonnes per annum).”

Petronet LNG plans to set up 1,000 LNG stations and to sell 4 million tonnes of LNG to the transport sector.

Singh said that the infrastructure for this exercise is being developed. “We have set up 4 LNG truck loading facilities at Dahej and one at Kochi. We are planning to expand LNG loading facilities from 4 to 30 at Dahej.”

Commenting on the branding and setting up mechanism of LNG retailing outlets that Petronet LNG is planning, Singh said, “We are working out different models – Company-owned-Company-Operated (COCO) or sharing stations with existing oil marketing companies.”

Singh also said that LNG will always remain a cheaper fuel than LNG. He assessed that in the long-term, LNG price will be around $10 per mBtu.

He said that Petronet LNG is working on a mechanism to make running LNG trucks even more lucrative. “We are working out a formula where retrofitted diesel trucks that run LNG can recover costs in two years or less from the savings they accrue,” Singh said.