Why This New 15-Year Agreement Could Reshape the Energy Industry!
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Agreement for Sale of Propylene and Hydrogen
Petronet LNG Limited (PLL) has signed a definitive agreement with Deepak Phenolics Limited (DPL) for the sale of 250 KTA of propylene and 11 KTA of hydrogen. The agreement, executed on February 6, 2025, follows board approval on January 27, 2025. The supply will be sourced from PLL’s petrochemical complex at Dahej and will continue for 15 years from the first delivery date.
Company Overview
Petronet LNG was established in 1998 as a joint venture between GAIL, Indian Oil, Bharat Petroleum, and ONGC, each holding a 12.5 per cent stake. The company focuses on developing and operating LNG import and regasification terminals in India to meet the country’s growing energy demand.
Financial Performance
In Q3 FY25, throughput at Dahej declined to 213 TBTU from 225 TBTU in the previous quarter. Total throughput stood at 228 TBTU, down from 239 TBTU. However, nine-month throughput reached a record high of 686 TBTU at Dahej. Q3 FY25 PBT was Rs 1,169 crore, a slight increase from Rs 1,140 crore in the previous quarter but lower than Rs 1,191 crore in the corresponding quarter.
Volume Trends and Challenges
Long-term volumes have dropped below 100 TBTU, currently at 96-97 TBTU per quarter. The decline is attributed to scheduling issues and fluctuating spot prices affecting service cargoes. The company is working on securing long-term contracts to stabilize volume commitments.
Regasification Revenue and UOP Dues
Regasification revenue for Q3 FY25 was Rs 840 crore. The company is addressing outstanding UOP dues of Rs 117 crore for CY24 and expects responses from off-takers by March 31, 2025.
Expansion and Capex Plans
PLL is expanding the Dahej terminal by 5 million tons, with current capacity utilization at 93 per cent. Capex for FY25 is projected at Rs 1,500 crore, with a significant increase to Rs 3,000-Rs 3,500 crore in FY26, mainly for petrochemical development.
Market Outlook and Challenges
LNG spot prices are expected to range between USD 12 - USD 14 for the next six months, potentially dropping to USD 7 - USD 8 post-2027. The company is optimistic about growth, focusing on capacity expansion and long-term contracts to navigate market challenges.
Disclaimer: The article is for informational purposes only and not investment advice.