State-run gas utility GAIl India ltd on Monday said it has signed a first-ever time-swap deal to sell some of its US liquefied natural gas (lNG) as it rejigs the supply portfolio in line with domestic demand.
GAIl Chairman and Managing Director B C Tripathi said the company is to receive lNG from its shale gas project in US from March next year. It has however time swapped some of the supplies.
Under the agreement, it will get 15 cargoes or about 0.8 million tonnes of lNG from an unnamed trader this year. In return, GAIl will sell 10 cargoes or about 0.6 million tonnes next year from Sabine Pass on the US Gulf coast.
“We imported 55 cargoes of lNG on short or medium term contracts in 2016-17. This equals to under 4 million tonnes of lNG in a year. This volume we expect to replace from our US portfolio,” he said.
GAIl has a deal to buy 3.5 million tonnes a year of lNG for 20 years from Cheniere Energy and has also booked capacity for another 2.3 million tonnes at Dominion Energy’s Cove Point liquefaction plant.
Against a supply of 5.8 million tonnes of lNG from US, GAIl has been able to create a market for just under 4 million tonnes in India and so it wants to sell of the remaining overseas.
Tripati said GAIl had separately signed a deal with Royal Dutch Shell to sell about 0.5 million tonnes of its US lNG.
So from a potential supply of 5.3 million tonnes (after the Shell deal), GAIl feels Indian market can absorb only 4 million tonnes or so.
“We hope to replace the short and medium term contracted volumes with US lNG,” Tripathi said, adding that the company has floated a tender to time-charter four lNG ships to ferry the gas in its liquid form (lNG) from US coast to Dahej in Gujarat.
The lNG that GAIl will receive this year between April and December under the time-swap deal will be at oil-linked prices. The sale of US gas next year will be at a premium to its pricing formula on a free-on-board (FOB) basis.
Tripathi said there are not many new takers for imported lNG particularly in the power sector which is price sensitive, thereby forcing the rejig of supply portfolio.
The company is also renegotiating price and time of supply of 2.5 million tons per annum of lNG by Gazprom of Russia.
GAIl is saddled with long-term deals for US and Russian gas after it went on a contracting spree between 2011 and 2013 when when the fuel was scarce and prices kept rising.
Meanwhile, the company has registered a 57% rise in profit after tax for the Financial Year 2016-17 with the PAT increasing to Rs 3,503 crore from Rs 2,226 crore in the last fiscal. The rise in profit was boosted largely by a turnaround in the company’s petrochemical business, increase in profits from gas transmission business and partial sale of stake in Mahanagar Gas limited (MGl), despite lower price realisation in polymer and liquid hydrocarbons.
These results are after considering impairment of Investment in Ratnagairi Gas and Power Pvt. ltd. (RGPPl) in 4th quarter of FY 2016-17 for Rs 783 crore.
GAIl’s PAT excluding non-operating one offs (i.e. gain from stake sale in MGl and impairment of Investments in RGPPl) is Rs 3,797 crore, an increase of 71 per cent year-on-year (yoy).
The Board has proposed a final total dividend of Rs 2.70 per share (subject to approval of shareholders) making the total dividend for the year Rs 1,535 crore, up by 120 per cent as compared to FY 2015-16. The earning per share is also up by 57 per cent to Rs 20.71 per share on increased paid-up equity. During FY 16-17, GAIl also issued Bonus share in ratio of one bonus share for every three equity shares held.