Petronet plans to buy as much as 2.25 million metric tons of LNG, equal to about 40 individual cargoes, for delivery in the year starting April 2007 to supply the country's largest gas-fired power plant at Dabhol, Dasgupta said on Feb. 9, before leaving for Algeria, Oman, Qatar and Abu Dhabi on an ``LNG buying spree.''
The extra gas would make state-controlled Petronet the world's largest buyer of spot cargoes, boosting profit. The company, whose shares have tripled since listing in March 2004, is tapping demand at gas-fired power stations as utilities expand capacity to ease blackouts across the nation.
``The spot market is beneficial to them because they make marketing margins,'' Ballabh Modani, an oil & gas analyst with Mumbai-based Batlivala & Karani Securities, said on Feb. 14.
The government bars Petronet from charging sales commission on LNG imported under multiyear contracts, in addition to a fixed fee to turn liquid cargoes into gas at its terminal, Modani said. Petronet gets about 2 percent commission on domestic sales of imported spot LNG cargoes.
Dahej, Hazira
The company, which has exhausted capacity at its 5 million tons-a-year terminal at Dahej, will lease 40 percent of Royal Dutch Shell Plc's 2.5 million tons-a-year terminal in Hazira. Petronet and Shell may import as much as 8 million tons in 2007, Dasgupta said. That's equal to 5 percent of global LNG demand last year, according to consultants Wood Mackenzie.
About 5,000 megawatts of gas-fired electricity generating capacity worth $4.4 billion is unused in India because of a lack of affordable natural gas, Power Secretary R.V. Shahi said on Oct. 13. India's economy would be a 10th larger but for power shortages, according to finance ministry estimates. The shortfall forces factories to install backup generators, raising production costs.
The nation's gas-fired power plants are getting 30 million cubic meters of gas a day, compared with 48 million cubic meters that would be consumed should capacity be fully utilized, Shahi said Oct. 13.
Algeria, Qatar
``We are leasing capacity at Shell's LNG terminal in Hazira to import some cargoes,'' Dasgupta said in a telephone interview from Delhi. ``Our terminal in Dahej cannot accommodate all the additional LNG.''
Petronet will import 13 individual cargoes in the year ending March 2007, Dasgupta said. Two cargoes are arriving from Algeria in February and March. Qatar, where production was disrupted last month, supplied one each in January and February, he said. Each cargo of LNG, gas chilled to liquid form for supply by ship, averages 55,000 tons.
Dasgupta is tapping supplies from countries as far as Algeria and Egypt, from where it takes a LNG tanker twice as long to reach India compared with supplies from Qatar, because of shortage of cargoes in the Middle East, he said.
Shares of Petronet closed at 48.15 rupees yesterday, down 0.1 percent this year, compared with a 1.6 percent rise in the country's benchmark Sensex.
Petronet may make an additional 2.5 billion rupees ($57 million) in operating profits next year after selling the extra spot cargoes to its customers, Modani said.
Insufficient Supply
The company made a profit of 8.5 billion rupees in the three months ended Dec. 31, 2006. Sales rose 53 percent to 15.8 billion rupees in the quarter.
Locally produced gas supplies of 11 million standard cubic meters a day are not enough to meet the 17 million standard cubic meters required by NTPC Ltd., India's biggest power producer, Chairman T. Sankaralingam said on Feb. 7.
The power plant in Dabhol, begun by Enron Corp. in 1996, is key to ending power shortages in Maharashtra state, home to India's financial capital Mumbai. The plant has never worked at more than one-third of capacity because of Enron's collapse, disputes over power prices and a lack of gas for the furnaces.
Today, the plant operates at 15 percent, burning the costlier oil product naphtha. It will start receiving gas through a new pipeline later this year.
Maharashtra's Shortage
Maharashtra faces a shortage of 4,500 megawatts of power, Jayant Kawle, Maharashtra's principal energy secretary, told reporters on Feb. 5. Areas outside Mumbai face 12-hour-a-day power cuts, according to Maharashtra State Electricity Distribution Co.
Petronet, which is spending 16 billion rupees to double Dahej's capacity by December 2008, is controlled by Bharat Petroleum Corp., Oil & Natural Gas Corp., Gail India Ltd. and Indian Oil Corp. The state companies together hold 50 percent. A new terminal in Kochi on the east coast will be completed by 2010 at a cost of 20.5 billion rupees, according to Petronet's annual report for year ended March 2006.
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