Thebullishtrends: Petronet LNG share price closed on Friday at Rs.101. Petronet LNG has established with a Joint Venture by the Government of India to import LNG and set up LNG terminals in the country, it involves India's leading oil and natural gas industry players. It's promoters are GAIL
(India) Ltd (GAIL), Oil & Natural Gas Corporation Ltd (ONGC), Indian Oil Corporation Ltd (IOCL) and Bharat Petroleum Corporation Ltd (BPCL).The authorized capital is Rs. 1,200 crore ($240 million).Petronet LNG is also drawing keen interest from global energy industry stars.While French national gas company GAZ de France (GDF) is our strategic partner, Ras Laffan Liquefied Natural Gas Company Ltd, Qatar, has signed an LNG sale and purchase agreement (SPA) with Petronet LNG for the supply of LNG to India.
It has set up the first LNG Terminal at Dahej, Gujarat, with a capacity of 5 MMTPA, and are in the process of setting up another terminal at Kochi, Kerala, with a capacity of 2.5 MMTPA.
The market for Petronet's regasified LNG from the expanded capacity at Dahej and the new terminal at Kochi will be a function of its own price, the price quoted by domestic suppliers and the qualityof their gas and the then prevailing prices of liquid fuel alternatives.
However, the price of LNG sourced under the existing long-term contract with Ras Gas will increase come 2009 when the five-year price freeze as per the contractual terms ends. Thereafter, the price will move in a band to be agreed with a floor and a cap. However, it may not be difficult for Petronet to pass on the higher cost to buyers given the rapidly growing demand for gas and the fact that liquid fuel prices are projected to remain at levels that will make gas an economic alternative.
Petronet LNG Ltd, is in talks with Sonatrach of Algeria for a 25-year contract to import 1.25 million tonnes of LNG per annum. “Petronet LNG will shortly sign a long-term contract for import of 1.25 million tonnes of LNG per annum for 25 years, with Algeria’s national oil company Sonatrach for import of LNG from its under-construction Skikda LNG terminal.The 4.5- million-tonne LNG export terminal would come up by 2011.
The vast majority of Algeria’s LNG exports go to Western Europe, especially France, Spain and Turkey. The agreement was not likely before next year and supplies would commence in 2011.
LNG Petronet is having healthy financials, netprofit up in 2nd quarter by 75% to Rs.115.51 cr. the company’s Dahej facility will be up and running by July 2008. The total volume will be 10 million by December 2008. The short-term volume growth would be 8.5 million.The regassification tariffs will go up to 72 cents per mmbtu from current 67 cents per mmbtu. The company is looking at a 25 - 30% CAGR growth over the next 3 years. Hence you can continue with this as long as it performs well.
