Petronet to foray into small-scale LNG business

NEW DELHI: In a bid to expand its presence in areas that do not have a gas pipeline network, Petronet LNG Ltd is looking to foray into the “small scale” liquefied natural gas (LNG) business.

Petronet MD Prabhat Singh said on Monday that the scheme would involve transporting LNG by road and re-gasifying it at the customer’s end, which is said was a first for India. For this, the company would set up re-gasification terminals at the consumers’ premises. Instead of investing in the infrastructure, it could look at a “buildoperate-transfer” model, where a third party would construct the same and transfer it to the company after five years.

The company, which saw a 5.3% decline year-on-year in its second quarter net profit, is looking at supplying LNG to the sponge iron, ceramics and refineries sectors.

The company officials hinted that they were negotiating with Qatar’s RasGas Company Ltd to avoid paying penalties for willfully partly reneging on a longterm gas supply contract after international prices declined sharply and the spot market became a lucrative option.

A decision to buy less than 90% of the committed offtake runs a significant risk that the company may have to pay up to `9,000 crore in penalties, an amount more than 10 times its annual profits.

“We have drawn around 68% of the committed quantity till September,” Singh said. While RasGas supplies LNG at around $12 per million British thermal units (mBtu), the spot market is at around the $8 per mBtu mark.

Petronet is being probed by the government for costly LNG purchases from Qatar and Australia.