Natural gas producers in India have reported healthy results for the December quarter. However, their volumes are under pressure owing to falling domestic production. Although imports are brisk, high prices in the global markets are a deterrent to faster growth, making it unattractive for investors. India’s biggest gas transporter, Gail India, reported a record high profit of . 1,285 crore in the December quarter, but it was boosted by a reduction in subsidy burden, an unpredictable factor. Its daily gas transmission volumes slid to 105 million units from 110 million units in the June 2012 quarter and 106 million units in the September 2012 quarter.
The second biggest gas transporter in India, Gujarat State Petronet, reported a 16.8% year-on-year drop in volumes at 27.2 million units a day in the December quarter — which was also lower sequentially — due to falling production from RIL’s KG-D6 field. The RIL field alone contributed 40-45% to the company’s total volumes. Its December 2012 quarter profits dipped 6% to . 119 crore.
Gujarat Gas posted a 179% growth in profit year-on year for the December 2012 quarter. However, at . 69.3 crore, the profit was still 30% lower sequentially. The dip in earnings could be primarily attributed to lower volumes — down 14% Y-o-Y and 8% Q-o-Q — on the back of higher cost, according to a report by Karvy Stock Broking.
India’s gas production has been steadily declining after peaking in the March 2010 quarter, mainly due to the fall in production at RIL’s KG-D6 block. Petronet LNG, the country’s biggest importer, did contribute by improving its import volumes.
The falling natural gas volume is a major worry for investors as new transporting capacities may remain under-utilised.
Still, there are a few positives. The government is mulling over a possible increase in domestic gas prices, which will incentivise production. Similarly, the petroleum ministry is trying to find a workable solution to RIL’s KG-D6 problems, while Gail has announced the commissioning of the Dabhol LNG terminal. Petronet LNG’s Kochi unit will commence business this April.
Howsoever, all these developments are too small and scattered to assuage investor sentiments.
The second biggest gas transporter in India, Gujarat State Petronet, reported a 16.8% year-on-year drop in volumes at 27.2 million units a day in the December quarter — which was also lower sequentially — due to falling production from RIL’s KG-D6 field. The RIL field alone contributed 40-45% to the company’s total volumes. Its December 2012 quarter profits dipped 6% to . 119 crore.
Gujarat Gas posted a 179% growth in profit year-on year for the December 2012 quarter. However, at . 69.3 crore, the profit was still 30% lower sequentially. The dip in earnings could be primarily attributed to lower volumes — down 14% Y-o-Y and 8% Q-o-Q — on the back of higher cost, according to a report by Karvy Stock Broking.
India’s gas production has been steadily declining after peaking in the March 2010 quarter, mainly due to the fall in production at RIL’s KG-D6 block. Petronet LNG, the country’s biggest importer, did contribute by improving its import volumes.
The falling natural gas volume is a major worry for investors as new transporting capacities may remain under-utilised.
Still, there are a few positives. The government is mulling over a possible increase in domestic gas prices, which will incentivise production. Similarly, the petroleum ministry is trying to find a workable solution to RIL’s KG-D6 problems, while Gail has announced the commissioning of the Dabhol LNG terminal. Petronet LNG’s Kochi unit will commence business this April.
Howsoever, all these developments are too small and scattered to assuage investor sentiments.
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