The stock of India’s largest importer of natural gas, Petronet LNG, lost close to 1% on Wednesday on reports that the commissioning of its Kochi terminal will miss the deadline of the last quarter of FY13. This may not be a major setback for the energy major, as the ramping up of the project for the future was already in limbo due to lack of pipeline connectivity and customer base.
Petronet LNG’s 5 million tonnes per annum (MTPA) unit at Kochi is in addition to the 10 MTPA plant at Dahej. The Kochi unit was to begin commercial operations in the quarter to March 13. This is now facing some delays.
At the . 4,200-crore Kochi plant, regassification tariff will be higher than the $0.65 per million British thermal units (MMBTU) at Dahej. The company had mentioned in its annual report for FY12 that it has already tied up 1.5 MTPA of short-term LNG supply for the Kochi project. Supply of 1.44 MTPA of LNG from Australia’s Gorgon project on long-term contract will begin in 2014.
However, capacity utilisation at the new plant will remain below par for a few quarters post commissioning since the pipelines connecting it to key consumption hubs of Bangalore and Mangalore are delayed. “Initial volumes are likely to be low due to lack of a developed customer base and pipeline connectivity delays,” said a Credit Suisse report in October.
High LNG prices are affecting consumer interest too. NTPC’s Kayamkulam plant (potential consumption of approx 1.2 MTPA) has is not ready to sign a PPA at the current price, according to a recent report from Karvy Stock Broking. Also, Gail, which is laying the pipelines, is facing public resistance at different places along the route.
The Karvy report said that out of the optimal capacity of 5 MTPA, volume visibility is limited to 1 MTPA at Kochi. Sub-optimal use of capacity will mean undue burden on the company’s financials.
Petronet LNG’s 5 million tonnes per annum (MTPA) unit at Kochi is in addition to the 10 MTPA plant at Dahej. The Kochi unit was to begin commercial operations in the quarter to March 13. This is now facing some delays.
At the . 4,200-crore Kochi plant, regassification tariff will be higher than the $0.65 per million British thermal units (MMBTU) at Dahej. The company had mentioned in its annual report for FY12 that it has already tied up 1.5 MTPA of short-term LNG supply for the Kochi project. Supply of 1.44 MTPA of LNG from Australia’s Gorgon project on long-term contract will begin in 2014.
However, capacity utilisation at the new plant will remain below par for a few quarters post commissioning since the pipelines connecting it to key consumption hubs of Bangalore and Mangalore are delayed. “Initial volumes are likely to be low due to lack of a developed customer base and pipeline connectivity delays,” said a Credit Suisse report in October.
High LNG prices are affecting consumer interest too. NTPC’s Kayamkulam plant (potential consumption of approx 1.2 MTPA) has is not ready to sign a PPA at the current price, according to a recent report from Karvy Stock Broking. Also, Gail, which is laying the pipelines, is facing public resistance at different places along the route.
The Karvy report said that out of the optimal capacity of 5 MTPA, volume visibility is limited to 1 MTPA at Kochi. Sub-optimal use of capacity will mean undue burden on the company’s financials.
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