Petronet LNG, the country’s largest LNG receiving and regasification company, has a terminal at Dahej and is working on setting up one at Kochi. It has also been considering expanding into power as part of a forward integration strategy and in an effort to effectively manage its inventory of gas.
The company has managed to post improved profit margins despite the fall in the sales for the third quarter ended 31st December 2007, through cost control and curtailing of its overall expenses. On a q-on-q basis, sales was down 5.35%. Total expenditure was down 7.35% at Rs.1,349.05 crore (Rs.1456.16 crore) which resulted in the EBIDTA showing a rise of 7.74%. Net profit was up 13.48%. Consequently, the OPM improved at 15.43% (13.56%) and NPM at 8.29% (6.91%). The company’s performance has not been as good as it should have been. The margins on each million British thermal unit (mBtu) of gas sold has been up, yet, the fall in the volume of sales is what affected the overall performance.
India has only two LNG regasification terminals and both are in Gujarat. One is owned by Petronet and the other by Shell India. Petronet’s LNG facility at Dahej has the capacity to handle 5mtpa (million tonne per annum) of LNG, but it is limited in its ability to store the gas.
The company proposes to set up a 1,200MW power project at its Dahej LNG terminal where it is expanding capacity to 12.5mtpa in three years. It also plans to set up its second 1,000MW gas-based power project at its Kochi LNG terminal, which is expected to be ready by 2009.
There is also news that British Gas is in discussions with Petronet LNG for third party access to the company’s Dahej terminal for importing LNG. Imports may begin in early 2008-09, once Petronet completes capacity expansion of Dahej terminal.
The company is also in talks to buy stakes in gas projects in Australia. The size of the proposed equity purchases could vary between 5% and 50% in the coal bed methane projects. The company will also participate in Australia's bidding process for upstream projects being announced next week. It is looking at projects between 7 trillion and 15 trillion cubic feet.
Currently quoted at Rs.70, this is a very sound company and it would be better to stay invested as the long term prospects are very good.
Source: sptulsian.com
