Petronet LNG operates Dahej terminal at 109% of capacity

Petronet LNG Ltd reported a 30 per cent drop in its first quarter net profit on lower margins and said it has received interest from 17-18 global LNG players for hiring its almost idle Kochi terminal.

Petronet, India's biggest importer of liquefied natural gas (LNG), reported a net profit of Rs 156.60 crore in April-June, down from Rs 225.32 crore in the same period a year ago.

‘The decrease in net profit is primarily due to higher depreciation and interest charges pertaining to Kochi LNG terminal capitalised in the books of accounts in September 2013, and also lower margins at Dahej (terminal),’ its chief executive Ashok K Balyan said.

Petronet operated its 10 million tonnes a year Dahej import facility in Gujarat at 109 per cent of the capacity but its margins on import of LNG from spot market shrunk.

Also, the 5 million tonnes a year Kochi terminal is operating at just 1 per cent of the capacity as state gas utility GAIL India Ltd has not yet built pipelines to connect the facility to key customers in Bangalore and Mangalore.

‘The board has on Monday approved leasing out of storage facility at Kochi. We had recently sought expression of interest from LNG traders and marketers who want to use Kochi as an intermediate for storing of LNG,’ he said, adding the response to the tender has been tremendous.

About 17-18 international LNG marketers like Excelerate have envinced interest for hiring two LNG storage tanks of nearly 182,000 cubic meters gross capacity each.

‘We hope to finalise agreements and begin leasing out the facility by end of September,’ he said.

The storage can be used by traders who want to import gas and resell it to customers or entities seeking to contract LNG for their own use. The facility is also useful for LNG suppliers, like those in the Middle East, who want to use Kochi as an intermittent storage point for supplying customers in the east. Kochi can be used to store LNG during times of glut or low prices.

LNG is natural gas that is chilled to minus 160 degrees Celsius to liquid state for ease of transportation by ship. LNG is converted back into gaseous state at the import facility (regasification) before being sold to users such as power and fertiliser plants.

‘What we are proposing is that LNG will be imported at Kochi and stored in its liquid form at the tanks, for which we will charge a fee. The trader can at his convience take out or reload the LNG in cryogenic ships for sale to customers,’ he said.

Petronet Director (Finance) R K Garg said spot prices in April-June have fallen to $10.5 per million British thermal unit compared to $17-18 at the beginning of the year, putting pressure on margins.

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