Petronet targets to market 1.5 mt LNG via road

New Delhi, June 30: Petronet LNG, India's biggest importer of liquefied natural gas, targets to sell as much as 1.5 million tonne (mt) of the fuel annually by transporting it via trucks to customers not connected by pipelines, Prabhat Singh, managing director and CEO, told FE.

“Our target is that in the next three years, we want to create a market of 1.5 mt of LNG through this route (road). The trucks could load at any terminal,” said Singh, who served as director (marketing) of GAIL (India) prior to Petronet.

The strategy behind this move is to replace liquid fuel use by the trucks and small scale industries. Currently, Petronet operates two terminals – 10 million tonnes per annum (mtpa) at Dahej in Gujarat and partly a 5 mt- pa terminal at Kochi in Kerala.

The Petronet CEO said that nearly 70 mt of diesel is consumed annually in India. Of this, about 20 mt is utilised by long distance heavy duty trucks. Pointing out that there is a huge arbitrage between the diesel and LNG price — atleast $5 including all taxes — an LNG market could be created to substitute diesel. “The country's LNG demand could double just by replacing one liquid fuel. That is the capacity,” he explained.

Petronet is in talks with Tata Motors to buy about 100 trucks, which the gas importer would outsource to fleet owners for operating them. “The market is huge,” said Singh, adding that his fir m could cater to mere 1-2 mt. This means that other gas marketing firms such as GAIL and IOC too have a fair chance to share a pie once the concept of transporting LNG via roads is established in India.

“We have spoken to regulators and work is going on a fast pace. These trucks will run on LNG. For 1 mt of LNG, there is a need for more than 30,000 trucks. If we cater to 10,000 trucks, we would be able to utilise 0.1 million tonne,” Singh explained.

Inititally, Petronet would deploy the tucks in Kerala – Kochi to Mangalore. This is primarily because its five million tonnes per annum re-gassification terminal at Kochi remains under utilised at mere 5% capacity due to lack of evacuation route.

Gradually, it would introduce the business model in routes from Mumbai to Delhi and Mundra to Ahmedabad.