Petronet LNG Ltd, India's biggest gas importer, will invest Rs. 400 billion in the next five years for expanding import infrastructure as well as foraying into new business to boost profitability to Rs. 100 billion.
Petronet, which operates two liquefied natural gas (LNG) import facilities at Dahej in Gujarat and Kochi in Kerala, is looking to foray into the petrochemicals business, according to the firm's latest annual report.
The company has formulated a '1-5-10-40' strategy for exponential growth and diversification. "The company aims at achieving an annual turnover of Rs. 1000 billion over next five years and annual profit after tax of Rs. 100 billion with investments of Rs. 400 billion," it said.
It had a net profit or profit after tax of Rs. 33.52 billion on a turnover of Rs. 431.69 billion in fiscal 2021-22 (April 2021 to March 2022).
LNG is natural gas that has been cooled down to liquid form for ease of transporting in ships. At the import terminal, LNG is regasified into its gaseous state before piping it to users like power plants for production of electricity and fertilizer units for making urea and other crop nutrients.
Petronet said it is raising import capacity of the Dahej terminal from 17.5 million tonnes per annum to 22.5 million tonnes at an estimated cost of Rs. 6 billion.
Also, it is adding two more LNG storage tanks to the present six tanks at Dahej at a cost of Rs. 12.50 billion.
This is in line with the government vision of raising the share of natural gas in the primary energy basket of the country 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 high-seas "will cater to the increasing gas demand of the eastern and central part of the country," it said, adding a detailed feasibility report (DFR) for the 4 million tonnes FSRU based terminal with further scope for expansion to land based terminal of 5 million tonnes capacity has been completed.
Petronet's Kochi terminal has a capacity to import and regasify 5 million tonnes per annum of LNG. The company said it also plans to set up a petrochemical complex based on imported propane at Dahej LNG terminal.
It is also "exploring the option of setting up a propylene derivative complex in the near future." It, however, did not give cost estimates or the timelines for the project.
Petronet said it is also eyeing overseas projects and has been shortlisted as one of the potential bidders for an LNG terminal at Matarbari, Cox's Bazar in Bangladesh.
It is also "exploring the business opportunities in LNG value chain in Sri Lanka and in process of collaborating with potential counterparts including the government of Sri Lanka," the annual report said.
The firm "envisages to be a global LNG player and has thereby incorporated a wholly-owned subsidiary company 'Petronet LNG Singapore Pte Ltd' on March 7, 2022." "Petronet LNG Singapore Pte Ltd has been incorporated to carry out business/activities, including but not limited to purchase of LNG on long, spot and short-term basis and sale of LNG, trading of LNG to Indian and foreign companies, optimization and diversion of LNG under its portfolio, carry out hedging, investments in overseas ventures etc," it added.
Petronet currently imports LNG on long-term contracts from Qatar and Australia. The re-gasified LNG is supplied to offtakers GAIL (India) Ltd, Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL) for further sale to actual users.
GAIL, IOC, BPCL and Oil and Natural Gas Corporation (ONGC) hold 12.5% stake each in Petronet.
"In order to meet this challenging target (of 1-5-10-40), your company also identified a need for optimization of the decision-making process for its executives at various levels. Accordingly, the company undertook an extensive exercise to re-visit the existing delegation of authority, wherein the executive powers were rationalized to align with its growing business needs.
"Similarly, Petronet also recognizes that strategic goals require harmony and alignment with the company's HR policies and practices, therefore, it became imperative to revisit the entire spectrum of HR policies and align it with industry best practices," the annual report said.