India’s gas importers benefiting from easing prices

The Dollar Business Bureau

Gas importers from India are benefiting from the easing of Liquefied Natural Gas (LNG) prices with expectations of good profits in the next few months, states a report by Nomura Holdings, a Japanese financial holding company.

India’s largest government-owned natural gas processing company Gas Authority of India Limited (GAIL) is all set to have a strong comeback after the weakest performance in the last year, Nomura said in its international market research report.

According to it, GAIL is benefiting from lower LNG price in the local market as well as the imports. The strengthening of the petrochemical product price is also benefiting this natural gas transportation company. It has benefited from 60% dip in the new LNG contract prices with Qatar’s RasGas at an estimated price of $5 per million British thermal unit (mmbtu) over the year. Spot LNG prices at $4-4.5/mmbtu are comparatively lower.

GAIL’s earnings decreased sharply by 31% in FY 2015, after recording y-o-y growth each year for the last ten years. GAIL earnings are likely to decline 27% for FY 2016 as it has reported a 55% drop during the first half of this fiscal year. This is the end of its decline in the earning as per the report.

Nomura report expects GAIL may renegotiate LNG import deals based on Henry Hub prices in the US. It says that the outlook is bright for Petronet LNG.  It forecasts a 79% upsurge in the growth of company's Earnings Per Share for FY 2017 and 30% for FY 2018.

Petronet LNG will also benefit from lower prices. It will continue to benefit from the expansion at Dahej LNG import terminal. This terminal is being expanded to a capacity of 17.5 million tonnes by 2019 from 15 mmt this year-end. The report forecasts 25% growth in FY 2016, 22% growth in FY 2017 and 47% in FY 2018 due to the expansion of the Dahej terminal.