Pipeline capacity remains a constraint: Petronet LNG

Petronet LNG's net profit was up Rs 111 crore in the April-June quarter of financial year 2010-11 as compared to Rs 103 crore in the same period last year. Net sales were up Rs 2,627 crore as against Rs 2,612 crore last year.

Speaking on the quarter gone by, AK Balyan, CEO and MD, Petronet LNG, said enhanced capacity led to higher numbers this time around. Petronet, he said, has upgraded capacity at its Dahej terminal.

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Balyan said pipeline capacity remains a constraint for the energy major. "We will have much more opportunities with spot cargoes once pipeline capacity expands."

Below is a verbatim transcript of the interview. Also watch the video.

Q: In quarter three and quarter four of last year, your revenues from spot cargos has dried up considerably. But in the current quarter you seem to have book revenues again from spots. Can you give us some details on what happened in that specific area in the current quarter and whether it indicates some resurfacing of demand through spot cargos again?

A: That one important thing has been that in the last few months we have updated the capacity of our Dahej terminal to 10 million tonne. That gives us capacity to bring in cargos beyond the long-term contracts there. While the overall quantity that we have been able to re-gasify and transport has been less compared to the last year’s quantities, but because of our internal efficiencies—the internal consumption of gas and efficiencies in the enhanced capacities has made it possible to get better results.

We are looking at some of the spot cargos, which maybe better priced in the prevailing international pricing. The constant that we face sometime is the pipeline capacity—we are not able to perhaps push more gas. I hope that in coming time we would be able to tie-up more spot cargos and push more gas for the consumers in the country.

Q: You were planning to bring in nine cargos of LNG. One has already been done earlier to this quarter. How many more might get consummated through this financial year and what would that provide by way of spot volume then?

A: Our spot cargos purchase depends upon what kind of requirements are there, what consumers need and where they need it. So it would be planned as per the requirement. I cannot say, but yes, it maybe of same order as last year but certainly because of the enhanced capacity, I would like to say, that we would have much more opportunity for bringing in spot cargos.

Q: Any ballpark indication then of what you may do in terms of total volumes for this year?

A: The present capacity of operations at Dahej is of the order of 7.5 million tonne per annum and since we have the capacity of 10 million tonne now, there is definitely an opportunity for us to bring in more gas. But bringing in more cargos is actually determined how much capacity is there in the pipeline to push gas to the consumer. 

We would be tying up depending upon the opportunities. But we see certainly more demand coming and in coming time, we would be looking for more spot cargos. But I cannot give a number as such on that.