Will commission Kochi terminal by July: Petronet LNG

Petronet LNG is banking high on its upcoming terminal in Kochi which is likely to be commissioned by July. In an interview with CNBC-TV18, RK Garg, director-finance at Petronet LNG said that initially it will cater to few customers and later when it gets connected to other two pipelines, volumes will pick up.

The liquefied natural gas (LNG) storage and re-gasification terminal with a 4 million tonne capacity is constructed with an aim to meet increasing natural gas demand from power, fertilizer, petrochemicals and various other industries in southern states. The company is also keen to supply LNG through road tankers to consumers.

Read This: Buy Petronet LNG; target of Rs 185: PLilladher

The company has announced highest ever profit of Rs 1149 crore in FY13, an increase of 9 percent year-on-year. It operated its Dahej terminal at 105 percent capacity during the year, almost at same level as last year.

The company also has plans to expand Dahej terminal from 10 million tonne to 15 million tonne. Read This: Petronet keen to buy 25% stake in Gujarat LNG terminal

Here is the edited transcript of his interview with CNBC-TV18

Q: Can you just take us through what exactly the marketing margins were this quarter for Petronet LNG and what was the volume growth?

A: During this full financial year we have operated over 100 percent of our capacity and we have the highest ever profit during this financial year at Rs 1,149 crore as compared to the last quarter of Rs 1,058 crore. Though in this quarter, volumes are low as compared to the last quarter, but the overall year has been good and we have a profit of Rs 1,149 crore.

Q: Can you take us through this quarter’s marketing margin performance itself? What have you done on the margin front?

A: There is a 5 percent increase in the regasification margin which happens every year and during this quarter also we received that 5 percent increase, but since the volumes were low our profit was Rs 245 crore. As compared to the corresponding quarter also there was a reduction because we had higher profit last quarter.

Overall, we have operated around 10 million tonne of capacity. There has been some demand destruction during this quarter because of higher prices especially in January and February, but now things have grown again with reasonable prices, so things are now okay.

Q: Can you just give us more perspective on how exactly the regas volume were this quarter in specific in Q4 and what is the trajectory that we could expect in FY14? Any guidance you are working with at least for the first two quarters?

A: As far as our long-term volumes are concerned, they were exactly the same as we did last quarter at 7.5 million tonne. Our own spot and short-term volume are also the same as expected, but this quarter the volumes where reduction has come because of tolling volumes, in that we are providing service cargos we are taking of Gas Authority of India (GAIL) and Gujarat State Petroleum Corporation (GSPC).

In the last quarter, substantial volumes have come from them, but this quarter there are only two cargos that came to our terminal. So there is a reduction on that. As far as next year is concerned, things are looking bright, because prices are now favourable.

We expect that we will operate our terminal beyond the capacity we did last year.

Q: When will you be commissioning the Kochi terminal and what kind of utilisations do you see from that terminal itself?

A: The Kochi terminal is mechanically complete and we are targeting to commission the it sometime in July.

As you know that Kochi has currently connected only one single pipeline which is around Cochin only, where the customers are only few and the volumes are going to be low, then the Kochi terminal will be connected to other two pipelines then the volumes are likely to increase.

Next year, we will face a challenge as Kochi because we will be operating at lower levels and as the pipelines are getting connected then volumes will ramp up.

Q: Can you just leave us with how exactly you all are doing in this quarter in terms of the Dahej Terminal? What sort of capacity utilisation are you all working with? What are the parameters such as the marketing margins looking like for this quarter’s performance?

A: Q1 has just started. We have just completed one month. I think you will have to wait.