Petronet LNG likely to commission Kochi terminal by May-Jun

RK Garg, director - Finance, Petronet LNG   expects the Kochi terminal to be commissioned by end of May or early June. In an interview to CNBC-TV18 he says, "Kochi is connected with a small pipeline within Kerala and that too around 44 kilometers. There is not much demand and for  that we will be buying spot LNG or short-term LNG from the market."

Below is the verbatim transcript of RK Garg's interview on CNBC-TV18

Q: During January and February, the international LNG prices have been pretty tight, did you see a fall in volumes because of the demanding prices?

A: In January and February because of the high demand in the market, especially in Japan due to high winter, the prices of spot cargoes and spot LNG has moved up. The price prevailing even for India was around USD 17 per mmbtu. The market has now softened and prices are coming down and it is currently hovering around mid-15 and therefore we are seeing the demand of LNG now.

Q: What were your utilisation levels in January and February, were they around Q3 numbers, significant lower, any number that you can give us?

A: In January and February because the prices were quite high, there has been a slow demand because the consumers in those sectors cannot afford the prices. Overall January-February even in March, is okay. As far as we are concerned, that terminal has a limitation that we cannot do beyond a nameplate capacity. We are already operating around 10 million tonne.

Q: With regards to fertilisers, have you seen a slackening of demand because that is usually a weak period, was the off-take much lower?

A: Fertiliser yes, off-take is now there and they are also looking for more gas and in terms of LNG. One thing is important for the fertiliser sector because a new fertiliser policy that had been announced few months back, now there is a lot of interest in the fertiliser industry for putting up more fertiliser facility and expansion and looking for more and more LNG in future.

Q: For this quarter itself, what is the volume that we can expect since you have a 5 percent tariff permitted, what might be the total value and volume that you might re-gasify?

A: Since we have 10 million tonne capacity, we are trying to meet the 10 million tonne mark in this quarter as well. The prices of LNG were high during this period as well as re-gasified rates are also up by 5 percent, the value will be higher. We will see as we close this particular quarter.

Q: There is a bit of an apprehension among the analysts that while volumes maybe a bit weak, even margins on spot will be significantly lower, could that impact profitability? Should the market be prepared for weaker profitability this time because of international factors?

A: It is very difficult to say at this moment. We will close the quarter and then we will see the result. Let us wait and then we will be able to share with you.

Q: Couple of quick updates LNG tie up for Kochi, do you think it is possible in next one-two months?

A: LNG Kochi terminal, we are likely to commission by end of May or early June. Currently, Kochi is connected only with a small pipeline connected within Kerala and that too around 44 kilometers. The demand is not that high. So, for that we will be buying spot LNG or short-term LNG from the market.

Q: When will the connection to the grid happen?

A: Whatever indications are available that could happen only in early 2014.

Q: What about the pipeline, according to some reports there could be rerouting and that will lead to a 20-25 percent jump in the project cost? Do you think that is likely because of the land problems?

A: There are issues that we are hearing. These matters have been discussed at the highest level within the government and also state government and are likely to be resolved soon. If there is any hike request by the land users, it would be resolved amicably and has been done earlier as well.

Q: Can you update us on both Dahej and Gangavaram?

A: Dahej is operating well, perfectly fine and we are expanding it to 15 million tonne, all activities are going on.

Q: What about the second jetty?

A: Second jetty is also on schedule and we are expecting it would be ready by early 2014.

Q: Will the 15 million tonne expansion be around that time?

A: I do not have exact number because second jetty is not exactly the expansion of Dahej terminal but it will give us flexibility in importing more cargoes at Dahej which is restricted today. So, there will be some increase. When we will have the jetty ready, we will be able to share the exact number with you.

With respect to Gangavaram, that project is also going as planned and all pre-project activities are going on at the moment.

Video Link:

Source: CNBC-TV18
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