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Petronet LNG's first quarter net profit rises by 10% to Rs 701 crore

Petronet LNGs first quarter net profit rises by 10% to Rs 701 crore
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New Delhi: Petronet LNG Ltd, India's largest liquefied natural gas importer, on Friday reported a 10 per cent rise in first-quarter net profit on processing larger volumes of imported fuel.

Net profit in April-June at Rs 701 crore compared with Rs 636 crore in the same period a year back, Petronet CEO A K Singh said on a media call.

The rise was mainly because its liquefied natural gas (LNG) import terminal at Dahej in Gujarat processed larger volumes.

"During the quarter ended June 30, Dahej terminal processed 196 trillion British thermal unit (TBTU) of LNG as against 194 TBTU processed last year," he said. The company 178 TBTU processed during the previous quarter ended March 31, 2022

The company reported the highest-ever turnover of Rs 14,264 crore in the quarter as against Rs 8,598 crore in April-June 2021 and Rs 11,160 crore in the previous quarter.

"The company was able to achieve robust financial results despite high LNG prices, owing to optimisation in its operation," he noted.

Singh further said Petronet is not buying any volumes from the spot or current market as all its LNG supplies are tied-up in long-term contracts with nations such as Qatar.

LNG prices on the spot market have jumped to $45 per million British thermal unit from $20 in mid-May and $ 25 in mid-June due to geopolitical reasons, he added.

The rates are three times the price at which LNG on long-term contracts was bought. Spot prices are unlikely to come down as demand in Europe for winter heating picks up.

"If prices continue in this fashion, to sustain existing consumption (of LNG) is a challenge. We don't foresee growth (in consumption) will start," he said.

While some sectors may be able to absorb high-priced feedstock (gas or LNG), others such as power and fertiliser are price sensitive. Gas at $8-10 per mmBtu price can compete with coal, which is the mainstay feedstock for generating electricity, but not anything above that, he said.

Singh said during April-June, the Dahej terminal operated at 87 per cent of its rated capacity of 17.5 million tonnes per annum.

Petronet, he said, is in discussions with RasGas of Qatar for extending the existing long-term contract beyond its expiry in 2028.

"Qataris are expanding LNG production capacity from 77 million tonnes per annum to 114 million tonnes. There is a huge capacity available beyond 2025-26.

There is no dearth of available of LNG beyond 2025-26," he said. "We are in serious discussions with Qatar for extending the contract."

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