Dahej's 5m t/y capacity addition will be used
Petronet-LNG is confident offtakers will book additional capacity at Dahej, which is expanding from 17.5m t/y to 22.5m t/y by March 2025.
During the quarterly financial results call on July 24 (2024), Petronet-LNG director finance Vinod Kumar Mishra conceded that no offtaker had yet booked expanded capacity but said discussions were ongoing. In February 2024, Petronet-LNG signed a 20-year agreement with LNG producer QatarEnergy to buy 7.5m t/y LNG from 2028 to 2048, extending a contract ending in 2028.
Mishra stressed that Dahej operated at 109% capacity in the three months to June 30 (2024) against 97% in the previous three months (to March 31, 2024) and 96% in the corresponding period of the previous year (April to June 2023). Given rising LNG demand, Mishra expects offtakers to book Dahej capacity from the next financial year (2025-26).
"One thing I can say (is) that at certain times, we are feeling some constraint in giving the (capacity) slots, but after this capacity expansion, we will have sufficient flexibility to allow the cargoes (and) even have more short-term and spot cargoes from the next year," said Mishra. "So, that will be a solace for us, and we will have a good throughput after that, but of course, we would like to get the capacity booked before next year so that it is in place and maximum capacity is utilised."
Mishra emphasised Petronet-LNG is "not worried" about Dahej capacity under-utilisation because LNG import volumes are increasing. Also, "there is no likelihood LNG prices will be too high in the near future because so many capacities (new liquefaction projects) are coming up and Europe has inventory."
However, he declined to comment on whether capacity utilisation will be 60% or 70% after March 2025, when Dahej capacity will be 22.5m t/y. Nevertheless, he believes the 5m t/y expansion is "low hanging fruit," costing just Rs570cr ($71m).
"If you go for a greenfield (or new) LNG terminal, it will have CAPEX of nearly Rs5000cr ($625m)," he said.