Petronet LNG expects prices to remain soft ahead

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Petronet LNG expects prices to remain soft ahead

Speaking to CNBC-TV18, Dr A Balyan, chief executive officer and managing director of Petronet LNG says this quarter is the highest ever quarterly output volume the company has recorded, as also the profit.

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Speaking to CNBC-TV18, Dr A Balyan, chief executive officer and managing director of Petronet LNG says this quarter is the highest ever quarterly output volume the company has recorded, as also the profit. The company had posted net up 73% at Rs 295 crore in the third quarter.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: Take us through the volume growth this time around for the company on a Y-o-Y and sequential basis as well as what you have done in terms of utilizations?

A: The Dahej terminal has done for this quarter the best result so far. We have been able to operate over 11.4-11.5 million tonne. Compared to the last quarter, we have done about 10 trillion BTU more, that means about 7% more. The capacity utilization is also up by 7%. The turnover has gone up by about 18% plus to Rs 6330 and the net profit has gone up from last quarter's Rs 260 by 13% to Rs 295 crore. So it has been an all-round improvement and this is highest ever quarterly output volume, as also the profit that the company has registered.

Q: One concern that the street has had is that because you are already operating at such a high utilization perhaps the incremental increase in volume growth that you have been seeing may not sustain, could you give us an outlook of what the volume growth might look like in terms of sales volumes?

A: Sales volumes, we have done 45 cargoes, which means, in terms of total heat value, it is 145 trillion BTUs. Compared to last year's volumes, it is 7% more. In terms of actual levels, it comes to around 11.5 million tonnes per annum if one wants to average it out on an annualized basis. We have no problems with the running equipment and the capacities that we have to operate this at this level.

Q: On volume front for this quarter in particular can you break up what you did in terms of firm and spot volumes?

A: In terms of long-term gas output we have done 32 mmbtu compared to 27 mmbtu last quarter, and total, we have done 45 mmbtu. That means the long-term gas, we have done more compared to last quarter and therefore the difference.

Q: You have been doing 100% utilization for couple of quarters now, what is the trend that we could see going forward for Petronet LNG and what is the scale up we could see in possible utilization levels then?

A: We have operated at almost 110% plus capacity now and with the kind of actions taken at the plant level operations, the operation efficiency has been very good. At this level, we are confident of operating it for a long time. There are several actions being taken in terms of expansion; the jetty construction is coming up quickly; the expansion plans are also getting implemented. So we feel that if we operate at this level, we can ramp it up by 2013 to perhaps a higher level.

Q: For this quarter could you break up your margins in terms of what you did for regasification and even your marketing margins and what is the outlook on both of them going forward?

A: As you see our long-term supply remains at 7.5 million tonne and we have operated at more than 11 million tonne. That means the other volume, the spot short-term is growing. We feel that this has potential to grow further.

Q: The concern on the street was cap on marketing margins. Can you give us an update on what you could have possibly heard on that front at all?

A: Marketing margin, our understanding is one is that the regulator who is being referred to this, perhaps has to see within the act, whether there is scope for improvement. Secondly, we feel that regasified LNG is an imported gas where pricing is not controlled or facilitated by the government. So I don't think there is any issue on the margin for the imported gas.

Q: How do you expect the spot energy prices to move from here on?

A: We see a softening of trend in the international market and I think it would perhaps come to more realistic pricing regime. And after the Japan incident, the pricing are settling down to a lower level.