Vinod Kumar Mishra Director (Finance) and CFO, Petronet LNG Limited
Geared Up To Meet The Growing Gas Demand
How does the company plan to maintain its market leadership position in the face of potential competition from new terminals? What are your unique strengths?
Petronet LNG Limited (PLL) leads the Indian LNG market with two terminals: Dahej (17.5 MMTPA) and Kochi (5 MMTPA), covering 47 per cent of India’s re-gasification capacity. In FY 2024, PLL handled about 74 per cent of LNG imports and catered about 34 per cent of the country’s natural gas consumption. We are committed to fostering a sustainable future through innovation, diversification and responsible practices in the LNG Industry.
PLL is expanding the Dahej terminal to 22.5 MMTPA and also setting up two additional LNG storage tanks along with a third jetty, augmenting the company’s efforts to maintain a leadership position and continue playing a pivotal role in the energy security of India. PLL is also setting up a LNG terminal at Gopalpur in Odisha with an initial capacity of 4 MMTPA.
Does the company have any further plans for expanding the pipeline network beyond the Kochi-Bangalore project to enhance future demand and consumption?
PLL’s Kochi terminal has been in operation since 2013, meeting the natural gas demand of South India. The Kochi-KoottanadMangalore section of the Kochi-Koottanad-BangaloreMangalore Pipeline (KKBMPL) was dedicated to the nation at the hands of Prime Minister Narendra Modi on January 5, 2021. The construction of the remaining portion of KKMBPL is being expedited by GAIL and on its completion the Kochi terminal will be connected to the national gas grid, thereby improving capacity utilisation of the terminal substantially.
Based on industry trends and developments, what is the company’s long-term outlook for future demand, growth and terminal utilisation?
The company’s long-term outlook for LNG demand in India is positive, driven by the expanding energy needs and the government’s goal of making India a gas-based economy by increasing the share of natural gas consumption from the current level of around 6 per cent to 15 per cent in the primary energy basket by the end of the year 2030 while also taking into consideration the impact on environment.
India is witnessing significant investment in city gas distribution (CGD) and LNG dispensing infrastructure apart from the conventional use of LNG or RLNG in industries, power sector, refineries and fertiliser units, which would provide a boost to the gas demand in India in the coming years. To meet such a growing demand for natural gas and LNG, there is a need to enhance India’s LNG re-gasification infrastructure to around 150 MMTPA (considering 80 per cent utilisation) from the present 47.7 MMTPA. The company is likely to benefit from these trends and maintain its leadership position and enhance terminal utilisation.
What specific market research or analysis supports the anticipated 20 per cent growth in LNG demand for FY25? Are there any potential risks or uncertainties to this forecast?
The anticipated growth in LNG demand for FY25 is supported by several factors such as India’s robust GDP growth projected at 7 per cent for 2024 and 6.5 per cent in 2025 by IMF’s World Economic Outlook July 2024, increased industrial activities driving higher energy consumption, policy reforms and favourable LNG price outlook. The major potential risks and uncertainties include geopolitical conflicts and price volatility. Monitoring these factors closely will be crucial for adjusting strategies and mitigating risks.
What is your outlook on the Indian gas sector?
The Indian gas sector is poised to grow multi-fold owing to factors such as robust economic growth, India’s net-zero commitments, the government’s policy framework promoting use of cleaner energy and development of natural gas and LNG infrastructure such as pipelines, LNG terminals, city gas distribution, etc. Up to 24,881 km of natural gas pipeline are currently operational and 10,404 km are under construction. There are 300 geographical areas authorised in the country, covering 98 per cent of the population and 88 per cent of its area for development of the CGD network.
Further, to cater to the growing gas requirement, India’s regasification infrastructure is being expanded from the presently available 47.7 MMTPA to 66.7 MMTPA. India’s renewable power capacity is growing significantly, which is cyclical in nature, requiring gas-based power to complement and meet the growing power demand of the country.
Considering the readily available current gas-based power capacity of approximately 25 GW, natural gas and LNG in the power sector will be playing a critical role in ensuring energy security and at the same time supporting decarbonisation. With strategic investments and policy reforms, India shall witness an increasing role of natural gas and LNG in ensuring energy security and contributing to a cleaner energy future. Companies like PLL will play a crucial role in meeting the growing demand of gas and leading the LNG landscape in India.