Petronet LNG’s petchem project to provide high returns: CEO AK Singh

Petronet LNG approved investment of Rs 20,685 crore to set up a petrochemicals project.

Petronet LNG’s petrochemical project would have a high rate of return, said CEO A K Singh on October 30 after the company announced diversification plans.

Petronet LNG’s board of directors approved an investment of Rs 20,685 crore for setting up of petrochemicals project of 750 KTPA of PDH & 500 KTPA of PP plant including propane and ethane handling facility at Dahej in Gujarat. Shares of the company tanked around 10 percent following the announcement.

Addressing reporters at a press conference, Singh said the project has an internal rate of return (IRR) of more than 19 percent and an equity IRR of 30 percent. “Market should not have any apprehension about the profitability of this project because this has the inherent strength of existing LNG terminal,” he added.

The state-run gas importer has its largest import terminal at Dahej with a current capacity of 17.5 MMTPA. Singh also pointed out that the cold energy of LNG would be used in petrochemical complex, thereby saving huge operating costs.

Petronet LNG reported consolidated net profit of Rs 855.74 crore in the second quarter of financial year 2023-24, an increase of around nine percent from the year-ago period. Revenue from operations stood at Rs 12,532 crore in the quarter ended September 30, compared to Rs 15,985 crore last year.

Singh added that he expects diplomatic talks between India and Qatar would not become a hindrance in extending the company’s long-term LNG gas import deals beyond 2028 with the latter. This comes after Qatar imposed the death penalty on eight Indians arrested in the country last year, on charges that have not been made public.

The company buys 8.5 million metric tons per year of LNG under its deals with Qatar and is actively looking to renew its long-term agreements with that country, said Singh.