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We met Petronet LNG (PLNG) at the Deutsche Bank Namaste India conference.
The key takeaways from the meeting were:
** Kochi LNG terminal: Management has guided for commercial start-up
of the 5mmtpa Greenfield LNG terminal by September 2012 with an estimated
capex of INR42bn. PLNG expects a throughput of 1mmtpa in the
Kochi terminal for the next 12 months and believes it will increase only after
the commissioning of the Kochi-Mangalore-Bangalore pipeline, which it expects
to happen by December 2013.
** Regas margins: PLNG and the LNG offtakers (GAIL, BPCL, IOC) have
agreed to an equity IRR of 16% for the Kochi LNG terminal and the regas
margins will be set accordingly. The company expects a 5% p.a. escalation
in Kochi regas margin, similar to escalation in Dahej regas margins. PLNG
is also considering maintaining lower regas margins initially to promote LNG
market around Kochi and increase the margins later to realize their target
equity IRR of 16%.
** LNG sourcing: PLNG is not looking to enter into any long-term LNG
sourcing contracts at present as it expects long-term LNG prices to soften.
Instead, PLNG is planning to contract short-term/ medium-term LNG as it is
available at a lower price than long-term LNG.
** Dahej LNG terminal: The second jetty in Dahej is on track for completion
by June 2013, which will increase operating capacity at Dahej LNG terminal
from 10 to 13mmtpa. Moreover, PLNG aims to award the EPC contracts for
two additional tankers and vaporizers by December 2012. This will enable
PLNG to increase capacity in Dahej to 15mmtpa and its total regas capacity
to 20 mmtpa by March 2016.
** East Coast terminal: PLNG has commissioned a detailed feasibility report
(DFR) to set up a 5mmtpa greenfield LNG terminal at Gangavaram in
Andhra Pradesh. The estimated capex for the project is US$900m and a final
decision on this is expected to be taken in the next 6 months.
We rate PLNG a Buy with a TP of INR200/sh, as a key beneficiary of the
persistent gas demand-supply deficit in India
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We met Petronet LNG (PLNG) at the Deutsche Bank Namaste India conference.
The key takeaways from the meeting were:
** Kochi LNG terminal: Management has guided for commercial start-up
of the 5mmtpa Greenfield LNG terminal by September 2012 with an estimated
capex of INR42bn. PLNG expects a throughput of 1mmtpa in the
Kochi terminal for the next 12 months and believes it will increase only after
the commissioning of the Kochi-Mangalore-Bangalore pipeline, which it expects
to happen by December 2013.
** Regas margins: PLNG and the LNG offtakers (GAIL, BPCL, IOC) have
agreed to an equity IRR of 16% for the Kochi LNG terminal and the regas
margins will be set accordingly. The company expects a 5% p.a. escalation
in Kochi regas margin, similar to escalation in Dahej regas margins. PLNG
is also considering maintaining lower regas margins initially to promote LNG
market around Kochi and increase the margins later to realize their target
equity IRR of 16%.
** LNG sourcing: PLNG is not looking to enter into any long-term LNG
sourcing contracts at present as it expects long-term LNG prices to soften.
Instead, PLNG is planning to contract short-term/ medium-term LNG as it is
available at a lower price than long-term LNG.
** Dahej LNG terminal: The second jetty in Dahej is on track for completion
by June 2013, which will increase operating capacity at Dahej LNG terminal
from 10 to 13mmtpa. Moreover, PLNG aims to award the EPC contracts for
two additional tankers and vaporizers by December 2012. This will enable
PLNG to increase capacity in Dahej to 15mmtpa and its total regas capacity
to 20 mmtpa by March 2016.
** East Coast terminal: PLNG has commissioned a detailed feasibility report
(DFR) to set up a 5mmtpa greenfield LNG terminal at Gangavaram in
Andhra Pradesh. The estimated capex for the project is US$900m and a final
decision on this is expected to be taken in the next 6 months.
We rate PLNG a Buy with a TP of INR200/sh, as a key beneficiary of the
persistent gas demand-supply deficit in India
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