Moody’s Investors Service, (“Moody’s”) today assigned a first-time Baa3 Corporate Family Rating (CFR) to Petronet LNG Limited (“PLL”). The outlook on the rating is stable.
”PLL’s Baa3 CFR reflects its dominant position in a growing industry, as the first and largest LNG terminal operator in India, accounting for about 76% of total installed regasification facilities in India”, says Vikas Halan, a Moody’s Vice President.
The rating also benefits from company’s large proportion of cash flows from long term gas purchase and sale agreements with high quality counterparties, its experienced management team committed to a conservative financial policy, and its strong credit metrics with robust liquidity.
”PLL’s rating is, however, constrained by its small scale, its lack of business diversification, and the execution risk from its large capital expenditure over the medium term, which will result in deterioration of credit metrics over the construction period,” adds Halan, who is Lead Analyst for PLL.
”The stable outlook reflects PLL’s large headroom in its current rating category and our expectation that PLL’s credit metrics will stay appropriate for its ratings over the next 12-24 months, despite execution of largely debt funded expansion plans. It further reflects our expectation that given PLL’s track record and an experienced management team, PLL will execute efficiently its expansion plans and continue to maintain high utilization level at its Dahej terminal and improve utilization at Kochi terminal steadily to at least 50% over next 3 years,” adds Halan. >> Read More
22 February 2014 - 10:23 am
Despite stockpiles imploding and prices exploding in the short-term, The U.S. Energy Information Administration (EIA) has predicted that natural gas production in the US will continue to grow at an impressive pace. Right now output is close to 70 billion cubic feet a day and is expected to reach over 100 billion cubic feet per day by 2040. The trend is likely to continue without hitting a geologic “peak”, and along with this trend will come new marketing opportunities for America. The following exclusive interview with OilPrice.com answsers some of the bigger questions…
In an exclusive interview with Oilprice.com, EIA Administrator Adam Sieminski discusses:
• What’s at stake in lifting the US crude export ban
• Whether lifting the ban is inevitable
• Why energy-related CO2 emissions will likely climb this year
• What we can expect from US coal output through 2014
• Why US natural gas production will continue to grow strongly
• Where we can expect (unexpectedly) new production to come from
• Why Alaska just might surprise us
• Where the biggest new shale opportunities lie
• How production increases might come from ‘non-shale’ formations
• The potential for Colombian shale
• What to expect from Mexico’s reforms
• What the Panama Canal expansion really means
• Why we will see new marketing opportunities for the US
Interview by James Stafford of Oilprice.com >> Read More
12 February 2014 - 7:12 am
The FIR ordered by the Delhi government against two petroleum ministers Murli Deora and Veerappa Moily and Reliance Industries for a future spike in natural gas seems oblivious to the role of former minister Jaipal Reddy in seeking expert advice to shore up India’s energy security, and that of C Rangarajan, head of the PM’s Economic Advisory Council, who came up with the pricing formula to energise the hunt for domestic oil and gas.
Rangarajan, appointed by the Prime Minister in April 2012 on Reddy’s request for a re-look at exploration contracts and suggest alternative models, opted for shifting to revenue sharing from the current cost-recovery fiscal regime.
And for that shift, it recommended linking the price of domestically-produced gas to an average of international benchmarks such as US Henry Hub and the average well-head price at which India imports gas.
Rangarajan explained his approach to CPI MP Gurudas Dasgupta — his petition on the subject is in the Supreme Court — who had alleged that the expert panel recommended doubling of price to $8.4 per million British thermal units even though the actual cost of production in 2011-12 was $2.74 per mBtu.
In his rebuttal to Dasgupta’s letter last August, Rangarajan wrote that the prime concern was shoring up India’s oil and gas output which required moving to the revenue-sharing regime.
“A cost-based pricing of gas would be inconsistent with the new investment regime recommended for new production sharing contracts by the committee. A cost-based regime also gives no incentives for effecting improvements in efficiency for cost-reduction,” says the rebuttal from the Prime Minister’s Office.
It argued that the cost-plus method, as suggested by Dasgupta, was not provided for even under the current contracts which permitted an arm’s length pricing. Secondly, such a system was prone to goldplating of costs that led to disputes and delays and made the investment climate “less attractive”. >> Read More
13 January 2014 - 18:26 pm
Close on the heels of the biggest-ever increase of Rs 4.50 per kg, the cost of CNG may go up by a steep Rs 8 per kg from April 1 when natural gas prices will almost double.
The government on Friday notified the pricing of all domestically produced natural gas at an average of global gas trading hub rates and the cost of imported LNG. Accordingly, the price of gas is expected to be in the range of USD 8.2 to 8.4 per million British thermal units (mBtu) in April as against the current USD 4.2.
Oil Ministry officials said a USD 1 per mBtu increase in the price of domestic gas would result in a hike of Rs 2.93 per kg of CNG in cities that are entirely dependent on domestic gas.
While Indraprastha Gas Ltd, the supplier of compressed natural gas (CNG) in New Delhi, procures 72 per cent of its needs from domestic fields, Mahanagar Gas Ltd in Mumbai buys almost all of its gas from domestic producers. CNG retailers in Gurgaon and Faridabad get almost all of their gas locally.
For cities such as Mumbai, the USD 4 per mBtu hike in natural gas price will translate into an increase of Rs 11.72 per kg, while in Delhi the rate may go up by Rs 8.2 per kg, they said. >> Read More
31 December 2013 - 20:02 pm
Prime Minister Manmohan Singh will on Saturday dedicate to the nation a Rs 4,200 crore liquid gas (LNG) import terminal at Kochi in Kerala.
Petronet LNG Ltd, India’s largest importer of liquefied natural gas (LNG), had in August commissioned the 5 million tonnes a year LNG import and regasification facility at Kochi.
Prime Minister will dedicate the terminal to the nation at a function at Puthuvypu in Kochi on Saturday afternoon, official sources said here.
Currently, Petronet has an import and regasification terminal at Dahej in Gujarat with a capacity of 10 million tonnes per annum and is setting up a 5 million tonnes per year terminal on the east coast.
LNG is natural gas cooled to minus 160 degrees Celsius (minus 256 degrees Fahrenheit), shrinking the fuel to about 1/600th of its original size for transportation in ships. >> Read More
29 December 2013 - 14:23 pm
Reliance Industries and its partners BP Plc of UK and Canada’sNiko Resources may have to provide a maximum of $1.2 billion in bank guarantees over three years to get nearly double the rate for natural gas being produced from the main fields in KG-D6 block.
The Cabinet Committee on Economic Affairs (CCEA) had on December 20 decided to allow RIL to almost double the price of natural gas from April, 2014 provided the firm gave a bank guarantee to cover its liability if gas-hoarding charges are proved.
The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1&D3) fields in the eastern offshore KG-D6 block since 2010-11, sources said. >> Read More
26 December 2013 - 18:45 pm
CNG (compressed natural gas) price hike, by a steep Rs 4.50 per kg, is set to hit Delhi today, effective midnight. This is the second increase in rates in just three months.
Also, the price of cooking gas piped to kitchens has been increased by Rs 5.15 per kg with effect from midnight tonight.
CNG will cost Rs 50.10 per kg in Delhi and Rs 56.70 per kg in Noida, Greater Noida & Ghaziabad from midnight tonight, Indraprastha Gas Ltd (IGL) said.
The price of piped natural gas (PNG) to the households in Delhi is being revised from Rs 27.50 per standard cubic metre to Rs 29.50 per scm up to consumption of 30 scm in two months.
Beyond consumption of 30 scm in two months, the applicable rate in Delhi would be Rs 52 per scm. >> Read More
20 December 2013 - 6:35 am
Giving major relief to Reliance Industries, the Cabinet on Thursday decided to allow the company to double the price of natural gas from April provided the firm furnishes a bank guarantee to cover its liability if gas hoarding charges against it are proved.
The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1&D3) fields in the eastern offshore KG-D6 block since 2010-11.
The Cabinet Committee on Economic Affairs (CCEA) decided that the “contractor (RIL) will be allowed to sell natural gas from D1&D3 at revised price from April 1, 2014. The sale will be permitted on the basis of a bank guarantee to be furnished by RIL in favour of the Government for the incremental gas rate,” Oil Minister M Veerappa Moily told reporters here.
The CCEA headed by Prime Minister Manmohan Singh decided there will be no change in the Rangarajan formula of pricing domestically produced gas – both conventional and non-conventional fuels such as coal-bed methane and shale gas – at an average of international gas hub rates and the cost of liquefied natural gas (LNG) imported into India. >> Read More
16 December 2013 - 6:50 am
The finance ministry in a note has stated that it wants a cap on the gas pricing formula as a sudden increase in prices is likely to make electricity and fertiliser costlier.
Its view is in opposition to the stand of the oil ministry, which considers prices to be flexible .
In fact, the North Block considers as erroneous the oil ministry’s interpretation of an earlier group of ministers’ ruling about the formula being flexible.
Even now, at $4.2 per million British thermal unit (mBtu) the price is not flexible — when global crude crosses $60 a barrel, the price gets capped.
The petroleum ministry had come out with a ready reckoner on July 5, a few days after a meeting of the group of ministers that paved the way for higher prices. >> Read More