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Last Updated : Nov 21, 2012 06:11 PM IST | Source: CNBC-TV18

New gas norms won't impact any terminals: Petronet LNG

In an interview to CNBC-TV18 RK Garg, director-finance at Petronet LNG believes that new rules to introduce eligibility conditions for registration of LNG is not going to have any impact on their existing terminal at Dahej, as well as on their upcoming terminal at Kochi.


Recently the Ministry of Petroleum and Natural Gas on October 31, notified new rules to introduce eligibility conditions for registration of Liquefied Natural Gas (LNG) and there are various conditions under that.


In an interview to CNBC-TV18 RK Garg, director-finance at Petronet LNG believes that new rules to introduce eligibility conditions for registration of LNG is not going to have any impact on their existing terminal at Dahej, as well as on their upcoming terminal at Kochi.


He further adds that the requirement for registration is only for the new entity and not for an existing entity like them.


Talking about business environment, Garg says there is good demand for LNG and they did very well in H1. "We will continue to use our Dahej terminal beyond its capacity", said Garg.


Also read: No communication from govt on Q3 subsidy yet, says ONGC


Below is the edited script of his interview with CNBC-TV18's Latha Ventakesh Mitali Mukherjee and Ekta Batra


Q: Could you tell us what the impact will be per se, on the company?


A: The recent guidelines which have been issued by Ministry of Petroleum and Natural Gas would not have any impact on our existing terminals at Dahej, as well as at the upcoming Kochi Terminal. The reason being the Dahej terminal has been in operation since 2004 and the Petroleum and Natural Gas Regulatory Board (PNGRB) Act came only in 2006. The requirement for registration is only for the new entity and we were an existing entity before the Act came into being. We are supposed to inform to PNGRB about our activity which we did.


We believe that it is not going to have any impact on our existing terminals as well as the upcoming Kochi Terminal. In any case, we at Petronet are providing access to others for tolling their LNG cargos also. Even GAIL and GSPC are bringing their LNG short-term cargoes, spot cargoes to our terminal and we are providing rigger services to them. It is not an issue for us.


Q: Do you think that in the expansion in Kochi and Gangavaram, you will be bound by having to provide access to outsiders to the extent of 20 percent?


A: We are already providing access on our existing facilities, so it is not an issue for us. As far as the registration is concerned, the concern on the eligibility condition is not applicable to us.


Q: There is a school of thought which believes that the common carrier definition is actually for pipelines and not intended for LNG terminals. So would you be contesting the eligibility criteria at all? Secondly, does the existence of these criteria actually provide some kind of a protection for you because the newer guys are going to have a problem and you as the incumbent will actually enjoy an advantage?


A: We have not seen the regulations in that fashion yet. So we cannot say what we will do in future. As we mentioned earlier, this regulation is not going to impact our business. We are providing open access today, and in future also, we will continue to provide open access. That is our business model in any case. It is not going to impact our working and the business model that we are following today.


Q: From an industry point of view does the PNGRB have the power to declare LNG terminals as a common carrier? We understand that for Petronet it does not impact, because you are anyway providing it, but what about for the industry per se? Does the PNGRB have the power to do so and will the industry contest it if not you?


A: Our plain reading is that basically common carrier and common access was for the pipelines and was not exactly written for LNG terminal. In any case, there are many interpretational issues and one has to go into details. It is difficult to say at the moment what would happen to this latest eligibility criterion, which has been put in by the Ministry of Petroleum and Natural Gas and its implementation and interpretation of the act.


Q: How is business is shaping for you? How are you expecting volumes and rates for the second half of the year?


A: Business is going on perfectly as we have budgeted. We did very well in the first half (H1) and we are seeing good demand in the market. LNG availability is at reasonable prices and we are hopeful that we will continue to use our Dahej Terminal beyond its capacity. The demand is there and there is requirement for gas in our country. Since the domestic availability of gas is down, we need more and more imported LNG in the country.


Q: How do you think gas prices might trend both for the longer term contracts as well as for spot contracts in the second half?

A: As far as the second half (H2) is concerned the prices are firming up a little bit because winter is coming closer. There is a demand in other parts of the world but it has not yet reached to the level where India would withdraw from the market. So we are in the market and we will buy and we will continue to buy.



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First Published on Nov 21, 2012 02:09 pm
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