Petronet LNG says Tellurian deal will allow gas purchase at production price
Petronet LNG's proposed deal with US-based Tellurian is unique in nature as it will allow the Indian company to purchase gas at the production price, said Prabhat Singh, chairman and MD.
Petronet LNG's proposed deal with US-based Tellurian is unique in nature as it will allow the Indian company to purchase gas at the production price, said Prabhat Singh, chairman and MD. Petronet LNG signed a non-binding deal to invest $2.5 billion in Tellurian's Driftwood LNG export terminal in exchange for 5 million metric tonnes of liquefied natural gas (LNG) per year for over 40 years.
"Today it is a surplus gas supply market and therefore, it is very important for us to look into the aspect of being able to pick up material at the valid price, which means it is the cost, plus way of looking at the pricing. Therefore I am getting gas at the production price. This particular deal to that extent is as if I have my own field and I am consuming my own material,” he said.
Speaking about the terms of the deal, Singh said, “This MoU is primarily giving us an option to strike a deal with them anywhere from 1 million tonnes to 5 million tonnes. The contours will be studied. In terms of the investments, as Petronet we may not be going alone, we may be going with our affiliates into the system.”
“The demand here in the country, we have the city gas distribution which is going to give us nearly around 50 million cubic meters gas in the market in the first 8 years or so. Then there is this small scale LNG trucks and buses which are going to be there, which are going to create a demand for 8-9 million tonnes. So by the time we finalise this deal, we would also be in a position to look at downstream consumers and the offtakers, which are there and have a back-to-back tie-up with the consumers. There is huge scope in terms of the demand here and we would be in a position to tie up,” he further mentioned.
Expecting demand of more than 1 million tonnes in the next two-three years, he said. “More than a million tonne LNG demand is going to come up in the next two-three years’ time,” he added.
In terms of debt, Singh said, “We today have around Rs 750 crore on our books as debt but out of this, Rs 600 crore we are going to pay in October. So we will be left with Rs 150 crore of debt which we will pay in 2022 and we have nearly around Rs 5000 crore worth of cash in the system.”
On the corporate tax rate cut, he mentioned, “We would be getting 8 percent advantage now.”
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