LNG

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 surged for a third straight month by over 18 percent, helped by lower prices and higher domestic natural gas demand and amid more competition from rising local output from offshore the Bay of Bengal.

Indian liquefied natural gas imports surged by more than 20 percent last month helped by lower prices and higher domestic gas demand while gas output offshore the Bay of Bengal also increased.

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.

Indian LNG imports continued their 2022 decline though at a slower pace as costs in the year-on-year period jumped 65 percent and domestic natural gas output also began to lose some momentum as the nation’s consumption fell.

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 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.

Indian imports of liquefied natural gas dropped by 9.5 percent in June, the 10th straight monthly decline, as LNG prices have increased in the spot market and curbed buying activity in Asia.

LNG deliveries in June to India’s network of six terminals amounted to 1.81 million tonnes, or 27 cargoes, compared with 2.00MT, or 30 shipments, in June 2021, according to data just published by Ministry of Petroleum and Natural Gas.

Shipments in May 2022 had come to 1.87MT compared with 1.94MT in May 2021.

The import total for the fiscal year so far amounted to 5.47MT in the April-to-June period, down 9.6 percent from the 6.05MT delivered in the same three months of 2021.

Costs jump

India’s June LNG shipments cost around $1.2 billion, or 9,586 crore Indian rupees, compared with about $800 million, or 6,391 crore rupees, in June 2021.

The LNG imports from April to June cost $3.4 billion, or 27,163 crore rupees, compared with $2.4Bln, or 19,174 crore rupees, in the prior-year period.

The nation’s crude oil imports increased by 20 percent and 17 percent during June 2022 and April-June 2022 respectively compared with the corresponding period of the previous fiscal year.

This Ministry figures also showed that net imports of both oil and gas in June 2022 cost $13.0Bln, or 103,858 crore rupees, compared with $7.3Bln in June 2021.

LNG deliveries to Indian terminals come mainly from Qatar, which provides over one-third of volumes, as well as West Africa, the US, Asian nations, Australia, Russia and the spot market.

While LNG imports have declined every month since September 2021 more domestic pipeline natural gas has been produced offshore the East Coast of India in the Bay of Bengal.

India’s domestic natural gas production for the month of June was 2.81 billion cubic metres which was higher by 1.3 percent compared with the 2.77 Bcm of output in June 2021.

The Ministry data showed that production of natural gas for the first three months of the fiscal year came to 8.55 Bcm, an increase of 4.7 percent from the total of 8.17 Bcm of output logged in the April-to-June period of 2021.

The Krishna-Godavari Basin of Eastern India has seen production increases and output will rise further in the future from several projects involving the UK major BP in partnership with Indian group Reliance Industries, with additional output added by Oil and Natural Gas Corp. of India.

The latest Ministry data also gave average capacity utilization rates for the six operating LNG terminals during the previous month of May 2022.

The total capacity of the six terminals amounts to 42.7 million tonnes per annum of LNG.

However, the terminals are not always in the right places where natural gas demand is increasing and that’s why a wider spread of regasification facilities is still needed on the East Coast.

Terminal throughput

The largest Indian terminal at Dahej, located north of Mumbai and operated by Petronet LNG, has capacity of 17.5 MTPA and the latest utilisation rate from the Ministry for May was 83.8 percent compared with 87.5 percent utilization in the previous month.

At the Hazira facility, operated by Shell India, the utilisation rate dropped to 36.1 percent for 5.2 MTPA from 47.2 percent in April, while the West Coast terminal at Mundra also saw lower usage of 15.9 percent for its 5 MTPA of capacity, down from 19.3 percent in April.

The throughput for Gas Authority of India (GAIL) at the Dabhol terminal, located south of Mumbai, tumbled to 42.7 percent for 5 MTPA of capacity from 85.1 percent in April.

At the Kochi facility in the southwest state of Kerala usage was 20.1 percent for 5 MTPA compared with 20.7 percent the previous month.

At Kamarajar (Ennore), the only East Coast terminal, May usage was 12.0 percent for the facility with 5 MTPA of capacity, down from 13.0 percent in April.

The current average consumption levels of natural gas in India are in the following sectors: fertilizers (30 percent), power (15 percent), city-gas distribution (20 percent), refineries (9 percent), petrochemicals (5 percent) and others (21 percent). 

Indian imports of liquefied natural gas dropped for a ninth straight month, though the rate of decline slowed to 3.5 percent even as LNG prices increased while the fall in cargo deliveries was offset by another rise in domestic gas output.

Indian liquefied natural gas imports in the fiscal year from April 2021 to March 2022 declined by 3.4 percent, though still amounted to 350 cargoes even as costs jumped by 40 percent to almost $12 billion.