Our sourcing has been cheapest globally: Petronet LNG chief

Business Line, New Delhi

Petronet LNG says that it has sold more gas due to three spot cargo shipments in Q2. The company's CEO & Managing Director, Mr P. Das Gupta, says that sourcing has been cheapest globally and 80-85 per cent of spot cargo prices flow directly to bottomline.

You transported more gas in this quarter. The numbers are a bit ahead of our expectation?

That's right, we did three spot cargos in this quarter as against one in the Q1 and therefore we sold more gas, which is reflected in the results.

Any such surprises that are likely in the next couple of quarters? Are you negotiating with any other spot cargos, which might come on stream for you?  

We have already tied up two more spot cargos for October and the intention is to do at least three cargos every two months.

What sort of prices are you getting these deals at?  

These are all pass through. When I contract a spot cargo, such thing we do before confirming the contract. It is to check with the off-takers if they are willing to buy at this price. Not only off-takers, we check with NTPC or the fertiliser companies. They have been happily buying it for the last four-five months at these prices.

Incidentally, our sourcing has been the cheapest so far in the world and nobody has been able to source spot cargos at the rate, which we have been sourcing. In fact, one of the cargos in October is the lowest ever. It's going to be even cheaper than the first one that we did.

For the next two-three quarters are things tied up in terms of gas sourcing and how far have things reached with the Qatar deal that we talked about a few days ago?  

Spot cargos are contracted a month prior because the LNG producer also has to be absolutely sure that they would have surplus spot cargo. Therefore, they have to be careful. Otherwise they will land up in supply of pay obligations. So in September, therefore, we have tied up two cargos for October.

One arrives on October 17and the other arrives on October 28. We have already started scouting around for maybe two more in November. And as I said the minimum intent is to source three spot cargos every two months.

Any change or improvement in the carriage charges at all which could shore up your margins, the price that you charge for re-gasification?  

We are charging the same as we have been charging which is increased 5 per cent every year. It will undergo a change of 5 per cent in January. But we are charging the same uniform rate not only for our first five million tonne but also for the spot cargos.

So Q3 could be better than Q2 in the light of the spot contracts?  

It depends on the number of spot cargos we do. In Q2, we did three and Q3 we already have two more, it's already done. If we land up doing two more, one in November and one is December that's the minimum, it will be one cargo more vis-?-vis Q3.

What happens with spot cargos are that all our operating cost is fully amortised over five million tonne, the base quantity. So whenever we do a spot cargo the entire re-gasification cost barring 15-20 per cent, which is our cost go straight to the bottomline.

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