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UBS Investment Research
Petronet LNG
Management meeting key takeaways
Dahej operable capacity could be higher
Recent media reports on RIL’s reply to the Directorate General of Hydrocarbons
(DGH) indicated gas production from D1/D3 and MA field at 47mmscmd (while
RIL indicated these are estimates). Spot cargoes could be higher if RIL production
is lower. Also, operable capacity at Dahej could go up to 12MMTPA, if they do
night unloading and optimise the process. Management has guided for sales of 9.6-
9.7 MMTPA and 10.9-11.0 MMTPA in FY11 and FY12.
Management indicated significant demand for Kochi LNG
Management indicated that out of the estimated 7.5 MMTPA demand at Kochi,
c4MMTPA excludes Kayamkulam (Kerala government has not signed a PPA with
NTPC; limited visibility on the project) and other power plants. Regas margins at
Kochi could be cRs40/mmbtu. Kochi capex is Rs20bn in FY12/13. Dahej jetty
capex is yet to start.
Power plant could have benefits; aim to tie in 50-60% sales first
PLNG management has indicated that the decision of setting up a power plant will
require some term commitment of 50-60% capacity. Benefits include sourcing
flexibility, absence of VAT, cold energy harnessing, and saving of transport
charges. Management expects demand from SME industries even at Rs6-7/unit
power. We do not build in any power plant investment/earnings in our estimates.
Valuation: favourable catalysts; maintain Buy and Rs150 price target
We believe gas supply constraints and new GAIL pipelines are catalysts for the
stock. We derive our price target from a DCF-based methodology and explicitly
forecast long-term valuation drivers using UBS’s VCAM tool. Q4 may see 6-7
spot cargoes.
Petronet LNG
Petronet LNG (PLNG) is a joint venture company set up by the government of
India to establish LNG import and regasification facilities. It is primarily a
converter or tolling company. Anticipating the larger role of natural gas supply
in meeting the energy needs of Indian consumers, the Indian government
approved on 4 July 1997 the formation of a joint venture with equity
participation from ONGC, GAIL, Indian Oil, and BPCL at a 12.5% stake for
each. GDF (also known as Gaz de France), which holds another 10% of the
company, is also a strategic partner of the company.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Petronet LNG
Management meeting key takeaways
Dahej operable capacity could be higher
Recent media reports on RIL’s reply to the Directorate General of Hydrocarbons
(DGH) indicated gas production from D1/D3 and MA field at 47mmscmd (while
RIL indicated these are estimates). Spot cargoes could be higher if RIL production
is lower. Also, operable capacity at Dahej could go up to 12MMTPA, if they do
night unloading and optimise the process. Management has guided for sales of 9.6-
9.7 MMTPA and 10.9-11.0 MMTPA in FY11 and FY12.
Management indicated significant demand for Kochi LNG
Management indicated that out of the estimated 7.5 MMTPA demand at Kochi,
c4MMTPA excludes Kayamkulam (Kerala government has not signed a PPA with
NTPC; limited visibility on the project) and other power plants. Regas margins at
Kochi could be cRs40/mmbtu. Kochi capex is Rs20bn in FY12/13. Dahej jetty
capex is yet to start.
Power plant could have benefits; aim to tie in 50-60% sales first
PLNG management has indicated that the decision of setting up a power plant will
require some term commitment of 50-60% capacity. Benefits include sourcing
flexibility, absence of VAT, cold energy harnessing, and saving of transport
charges. Management expects demand from SME industries even at Rs6-7/unit
power. We do not build in any power plant investment/earnings in our estimates.
Valuation: favourable catalysts; maintain Buy and Rs150 price target
We believe gas supply constraints and new GAIL pipelines are catalysts for the
stock. We derive our price target from a DCF-based methodology and explicitly
forecast long-term valuation drivers using UBS’s VCAM tool. Q4 may see 6-7
spot cargoes.
Petronet LNG
Petronet LNG (PLNG) is a joint venture company set up by the government of
India to establish LNG import and regasification facilities. It is primarily a
converter or tolling company. Anticipating the larger role of natural gas supply
in meeting the energy needs of Indian consumers, the Indian government
approved on 4 July 1997 the formation of a joint venture with equity
participation from ONGC, GAIL, Indian Oil, and BPCL at a 12.5% stake for
each. GDF (also known as Gaz de France), which holds another 10% of the
company, is also a strategic partner of the company.
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