Petronet, India’s largest gas importer, seeks to enter petrochemical business
Petronet, India’s largest gas importer, seeks to enter petrochemical business
Petronet LNG Limited, India’s largest gas importer, will invest Rs 40,000 crore to enter new business to increase profits to Rs 10,000 crore along with expansion of import infrastructure over the next five years.
Petronet, which operates two liquefied natural gas (LNG) import facilities at Dahej in Gujarat and Kochi in Kerala, is looking to enter the petrochemical business, according to the firm’s latest annual report.
The company has devised a ‘1-5-10-40’ strategy for exponential growth and diversification. “The company aims to achieve an annual profit after tax of ₹10,000 crore with an annual turnover of ₹1 lakh crore and investment of ₹40,000 crore in the next five years,” it said.
Its net profit or profit after tax stood at ₹3,352 crore on a turnover of ₹43,169 crore in the financial year 2021-22 (April 2021 to March 2022).
LNG is natural gas that has been cooled to liquid form for ease of transport in ships. At the import terminal, LNG is re-gasified into its gaseous state before being piped to users such as power plants to produce electricity and fertilizer units to make urea and other crop nutrients.
Petronet said it is increasing the import capacity of the Dahej terminal from 17.5 million tonnes per annum to 22.5 million tonnes at an estimated cost of Rs 600 crore.
In addition, it is adding two more LNG storage tanks to the existing six tanks at Dahej at a cost of Rs 1,250 crore.
This is in line with the government’s vision to increase the share of natural gas in the country’s primary energy basket from 6.7% to 15% by 2030.
With both its terminals on the west coast, Petronet is now eyeing a third import facility on the east coast.
A floating LNG import terminal on the high-sea “will meet the growing gas demand of the eastern and central part of the country,” it said, adding a detailed feasibility report (DFR) for a 4 million tonne FSRU based terminal with further scope The work for expansion of the land based terminal to 5 million tonnes capacity has been completed.
Petronet’s Kochi terminal has the capacity to import and regasify 5 million tonnes of LNG annually. The company said it also plans to set up a petrochemical complex based on imported propane at the Dahej LNG terminal.
It is “exploring an option to establish a propylene derivative compound in the near future.” However, it did not give a cost estimate or timeline for the project.
Petronet said it is also eyeing overseas projects and has been selected as one of the potential bidders for the LNG terminal at Cox’s Bazar Matrabari in Bangladesh.
The annual report states that it is “exploring business opportunities in the LNG value chain in Sri Lanka and is in the process of collaborating with potential counterparts, including the Government of Sri Lanka.”
The firm “envisions to become a global LNG player and thus incorporate a wholly owned subsidiary ‘Petronet LNG Singapore Pte Ltd.’ on March 7, 2022.” “Petronet LNG Singapore Pte Ltd is incorporated to carry out business/activities including purchase and sale of LNG on long, spot and short term basis, trading, adaptation and diversion of LNG to Indian and foreign companies of LNG under its portfolio, hedging, investment in foreign ventures etc.,” it added.
Petronet currently imports LNG from Qatar and Australia on long-term contracts. The re-gasified LNG is supplied to GAIL (India) Limited, Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL) for further sale to end users.
GAIL, IOC, BPCL and Oil and Natural Gas Corporation (ONGC) hold 12.5% in Petronet.
“To meet this challenging target (1-5-10-40), your Company also identified the need for optimizing the decision making process for its executives at various levels. Accordingly, the Company has initiated a re-evaluation process. Extensive exercise undertaken.-Visit the existing delegation of the Authority, in which executive powers were rationalized to suit its growing business needs.
The annual report states, “Similarly, Petronet also recognizes that strategic goals require coherence and alignment with the company’s HR policies and practices, therefore, revisiting the entire spectrum of HR policies.” and aligning it with the best practices of the industry.”