LNG

QatarEnergy has signed an agreement for the supply of 7.5 million tonnes per annum of LNG to Petronet of India on a delivered ex-ship (DES) basis for a period of 20 years.

Petronet LNG, the state-backed owner of the largest Indian import terminal at Dahej in the West Coast state of Gujarat and a smaller facility at Kochi terminal in the southwest state of Kerala and with plans for a third terminal, is set to sign new long-term supply agreements with Qatar.

Petronet currently has three agreements it is renegotiating with QatarEnergy to extend beyond 2028 for 20 years or more.

Shareholders in Petronet, which began operations in 2004, have one agreement with Qatar to supply 5 million tonnes per annum, a second from 2009 for 2.5 MTPA and a third from 2016 for 1 MTPA.

The third deal is with the actual shareholders in Petronet - rather than the Petronet entity. These shareholders comprise the biggest Indian energy players GAIL India, Indian Oil, Bharat Petroleum Corp. and Oil and Natural Gas Corp.

The new deals are expected to be consolidated into two agreements instead of three. They would be for Qatari volumes in one deal of 7.5 MTPA and a second for 1 MTPA of cargoes.

Close to deal

“We are pretty close to signing the deals,” said Indian Oil Secretary Pankaj Jain in a statement.

At present, Petronet buys the 8.5 MTPA from Qatar with pricing based on a slope of about 12.67 percent of Brent crude plus a fixed charge of about 50 cents per million British thermal units and is apparently seeking better or similar terms.

Petronet also confirmed at the end of December 2023 that it was going ahead with a third import facility and its first on the East Coast at the Port of Gopalpur in the state of Odisha.

The company has proposed having a floating LNG facility at Gopalpur before converting to an onshore terminal. 

The total capacity of existing terminals in India rose in 2023 to 47.7 MTPA with the addition of the Dhamra terminal in Odisha owned by French major TotalEnergies and the Indian Adani group.

The new Petronet facility at Gopalpur would be India’s eighth, though would be only be the third located on the East Coast and the second in Odisha.

“Petronet LNG Ltd (PLL) has executed binding transaction documents and sub-lease deed and a Port Service Agreement with Gopalpur Ports Limited on December 27, 2023 for setting up of floating storage regasification unit (FSRU) with capacity of 4 MTPA (Phase-1), with provision for converting to 5 MTPA land-based terminal at Gopalpur Port,” said the company in its end-of-December statement .

Out of the seven Indian terminals operating the largest is Petronet’s onshore terminal at Dahej, located north of Mumbai and with capacity of 17.5 MTPA.

Petronet’s Kochi facility in the southwest state of Kerala has capacity of 5 MTPA, though is under-utilised because of a shortage of pipeline connections to markets.

Earnings

Petronet reported consolidated net profits at the end of October 2023 of 818.10 crore Indian rupees ($98.24 million) for the second quarter of the fiscal year compared with 744.25 crore rupees ($89.37M) in the second quarter of 2022 and 789.85 crore rupees ($94.85M) in the previous 2023 quarter to the end of June.

The company’s consolidated revenues from operations were much lower this year than last because of higher prices that prevailed in 2022.

The fiscal second-quarter revenues dropped by over 22 percent to 12,532.57 crore rupees ($1.30 billion) from 16,079.97 crore rupees ($1.93Bln) reported in the same quarter of last year.

However, the fiscal second-quarter income was higher than the 11,656.38 crore rupees ($1.39Bln) logged in the April-June quarter of 2023.

Indian liquefied natural gas imports jumped by 10 percent as lower prices helped encourage buyers while domestic gas output also increased along with the nation’s gas demand.

The decline in Indian liquefied natural gas imports slowed to 1.8 percent from the previous month’s 24 percent fall as cargoes for West Asia were expensive when competing with Europe and South America and as Indian domestic gas demand remained flat.

Indian liquefied natural gas imports dropped by 24 percent in May at prices lower than a year ago to reverse April’s brief rebound as domestic gas production was also flat while the start of the monsoon season in June has coincided with higher cargo prices.

Indian liquefied natural gas imports jumped by 11 percent in February to continue the resurgence in the nation’s natural gas use despite LNG cargo prices being 37 percent higher than last year.

Petronet LNG, the owner of the largest Indian import terminal at Dahej north of Mumbai, reported record revenues and profits amid declining cargo volumes in 2022 as energy prices jumped while domestic and industrial natural gas demand was variable.

Indian liquefied natural gas imports suffered another large monthly fall by more than 16 percent because of the slowing economy and the higher prices needed to attract additional shipments from the higher-priced Atlantic Basin.

Indian liquefied natural gas imports have plunged by 19 percent amid a continued 2022 decline in the nation’s LNG deliveries because of a slowing economy, a tighter gas market and the falling value of the rupee against the dollar that makes shipments more expensive.

Indian imports of liquefied natural gas dropped by 2.7 percent in July, the 11th straight monthly decline, as LNG prices have increased in the spot market and continue to curb purchases in Asia.