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Analyst Meet / AGM
04-Feb-19
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Conference Call
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Petronet LNG
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Dahej expansion to be complete by June 2019
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Petronet LNG conducted conference call to discuss results for the quarter ended December 2018 and way forward. Mr. V.K. Mishra, Director (Finance), Mr. Mukesh Gupta, Vice President (Finance) and Mr. Pankaj Wadhwa- Sr. VP Marketing of the company addressed the call.
Highlights of the Concall
- Volumes during the quarter was 202 thousand btu (TBTUs) in Q3FY'19 compared to 223 thousand btu in Q3FY'18 and 217 thousand btu in Q2FY'19.
- Dahej terminal volume was 197 thousand btu while Kochi terminal handled 5 TBTUs of LNG.
- Out of total Dahej volumes- 109 TBTUs were from long-term supply, 4 TBTUs were for short-term supply and 84 TBTUs were re-gasification quantities.
- Current Dahej utilization was 103% compared to 113% in Q3FY18 and 111% in Q2FY19.
- Q3FY19 volumes were down due to lower power sector demand which reduced 2-3 cargoes in November and December. However teh company does not see any concerns from other consuming sectors
- Dahej's 2.5 mmtpa expansion is scheduled to be completed by June 2019, but the company is trying to advance the commissioning. The company has received requests from customers. Volumes should ramp up in the ensuing quarters and is expected to hit 17.5 mmtpa expanded nameplate capacity by latter part of fiscal (2HFY20).
- The company is in discussions with customers for expanded capacity usage of Dahej terminal. 2.5mmtpa capacity would be available after a few months upon commissioning and stabilization, when demand will also be assessed. The company aims to have 100% capacity utilization.
- Dahej additional tank completion should take 3-4 years, after which capacity will touch 19.5 mmtpa, though may not lead to equivalent volume growth initially. A 3rd jetty is also planned to provide flexibility.
- Dahej tank capex is Rs 700 crore and currently the tendering is on.
- Good demand exists for the Dahej terminal due to its strategic location, pipeline connectivity, and lower tariffs.
- The company has affected a 5% regas tariff hike in Dahej on 1st January.
- The Kochi Mangalore pipeline of GAIL to be ready by June 2019 post which volumes of the terminal should rise to 1-1.2 mmtpa from 0.5 mmtpa now. The delay from the February schedule was due to monsoons in Kerala/Karnataka in CY18.
- MCFL is ready to receive RLNG with 0.7 mmscmd demand, while MRPL+OMPL is working to convert and take a few more months to be ready to receive R-LNG with demand standing at 1.5 mmscmd. Further, BPCL is going for refinery modification and by the year end would take 2.5 mmscmd. Hence, 5mmscmd demand in Kochi terminal would be there. Besides, CGD development in South should also add to this. PLNG is looking for L-CNG (through tankers) and should tie up with CGD entities in the region. Ultimately, Kochi would hit 1.5 mmtpa volumes from all these.
- The location of the bangaladesh terminal plant changed from Kutubdia to Matabari due to naval requirements in the former. The company would have to study the new location again and hence delay would be there. The cost of the earlier study was insignificant and write-off is not expected.
- Bangladesh's government wants to bid out the land-based terminal and wants PLNG to participate in it, but PLNG wants a G2G nominated award though has not ruled out bidding completely. Hence, the project may see some delay.
- Good gas demand exists in Bangladesh and the project falls under 16% equity IRR target of PLNG.
- The company is looking at a long-term gas supply sourcing deal under which landed LNG in India would be costing below US$6 per mmbtu. Currently, US natural gas is available at less than US $0 per mmbtu in some regions as it is a byproduct to shale oil. At US$1 per mmbtu well head price there, delivered to India would be US$6. The contract would be a fixed-price one with 15 years term contract.
- Tax rate was lower in Q3FY19 due to tax holiday, amounting to Rs 150 crore annually.
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