Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Union Budget
Budget 2011-2012 Home
Industry Expectations - Budget 2011-2012
Industry Reactions - Budget 2011-2012
Budget 2010-2011
Budget 2010-2011 Home
Industry Expectations - Budget 2010-2011
Industry Reactions - Budget 2010-2011
Contributor's Corner
Bonanza Portfolio
Hemant K Gupta
Krish Bhatt
S A A R T H I
Trinity Investments
Exchange Information
BSE 2009 Holidays
NSE 2009 Holidays
Investor Guide
Depository & Dematerialisation
Grievance Redressal
Investor Guide
SEBI
Trading of Securities
Transfer of Securities
Your Rights
Budget 2009-2010
Budget 2009-2010 Home
Industry Expectations - Budget 2009-2010
Industry Reactions - Budget 2009-2010
Interim Budget 2009-2010 Home
Industry Expectations - Interim Budget 2009
Budget 2008-2009
Railway Budget 2008-2009
Industry Expectations - Budget 2008
Union Budget 2008-2009
Highlights of Budget 2008-2009
Summary of Budget 2008-2009
Industry Reactions - Budget 2008
IPOs
Current IPOs
Past IPOs
IPO Subscription
Mutual Funds
Gold Exchange Traded Fund
MF Unique Holding
Forthcoming Dividends
ELSS Schemes Comparison
Tax Plans
New Fund Offers
Research
Arbitrages
Equity
Market Whispers
Tax Planning
Home
Equity Linked Savings Scheme
Post Office MIS
9% GOI Senior Citizens Savings Scheme
8% Savings (Taxable) Bonds
Kisan Vikas Patra
National Savings Certificate
Public Provident Fund
Research

| More

Petronet LNG - LNG deal irregularities: no material impact - Ambit

Posted On: 2013-03-05 05:09:54

Media reports have yet again highlighted irregularities in LNG agreements signed by Petronet LNG (PLNG) with Qatar's RasGas. Such reports have frequently surfaced over the past couple of years. The Ministry of Petroleum and Natural Gas (MOPNG) had conducted an internal probe last year and had not found any irregularities. Our discussions with the management and primary data sources in this regard suggest that the renegotiation was done: (a) on commercial grounds of expediting the ramp up of the Dahej terminal and (b) after taking due approvals from PLNG's Board, promoters and the MOPNG.

Event: Media reports suggest that a former secretary to the Indian Government has written to the Prime Minister's Office alleging irregularities in LNG agreements signed by PLNG with RasGas. The Ministry of Petroleum and Natural Gas (MOPNG) appears to have ordered a fresh enquiry into the above deal, according to media reports.

Our view: The allegation is related to the tranche-2 LNG volume of 2.5mmtpa (over and above the original tranche-1 volume of 5mmtpa being supplied at Dahej) that was to be supplied by RasGas for the Kochi terminal. But as the construction of the Kochi terminal was delayed, PLNG renegotiated the contract with RasGas in 2005, to supply the tranche-2 volume to Dahej (instead of Kochi) and advance the supply by five years. But as RasGas did not have adequate availability of rich gas, the renegotiation terms allowed RasGas to supply rich gas only on a 'best-endeavour' basis rather than the contractual commitment. (Rich gas contains compounds like propane and butane from which LPG and other petrochemicals can also be produced as compared to lean gas, which can only be used as burning fuel.) The allegation is that PLNG is getting only ~6.5mmtpa of rich gas from RasGas versus the original agreement for 7.5mmtpa, though the pricing terms were not changed, causing a loss of Rs270bn to the country.

We spoke to the management and our primary data sources in this regard. The management has denied any irregularities and has stated that the re-negotiation was approved by the Board of Directors after seeking approval from the MOPNG and all the four promoters (ONGC, BPCL, GAIL and IOCL). Note that the MOPNG had already probed the deal last year and no irregularities were found. Our understanding suggests that the re-negotiation was done: (a) on commercial grounds of expediting the ramp up of the Dahej terminal, and (b) after taking due approvals from PLNG's Board, promoters and the MOPNG.

Where do we go from here? We reiterate our positive view on PLNG due to continued tightness in the domestic gas demand-supply balance. The company's proactive capacity expansion will only strengthen its competitive position in the LNG regasification business. Our positive view is based on strong volume growth expectation (FY13-20 CAGR of 11%) and is not contingent on strong regas/marketing margin. The market has been concerned on the utilisation of the Kochi terminal primarily due to: (a) uncertainty on the commissioning of Phase II of the pipeline, which will carry gas from the Kochi terminal to Bangalore and Mangalore, and (b) limited visibility on demand potential. We are cognizant of these concerns given that Kochi is a new market for gas, and hence we had already assumed a slow ramp up of the Kochi terminal, starting at 10% utilisation in FY14 and achieving 100% utilisation only in the fifth year of operation (i.e. FY18). The key triggers for the stock are: (a) the signing of the 3-4mmtpa longterm LNG contract, which provides volume visibility for Kochi terminal, and (b) end of the regulatory overhang on marketing and regas margin. The stock is currently trading at reasonable valuations-FY14 P/E of 10.8x and FY14 P/B of 2.1x.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Nestle India - 4QCY16 Result Update - Better Times Awaited; Maintain REDUCE - Reliance Securities
Kalpataru Power Transmission - 3QFY17 Result Update - Growth Momentum Continues; Strong Order Book Offers High Revenue Visibility - Reliance Securities
NALCO - 3QFY17 Result Update - Strong Performance on Higher Volume, Realizations - Reliance Securities
Further Re-rating of HDFC Bank to come from Core earnings growth: Angel Broking
Cadila Healthcare - no 483 For Moraiya plant: Angel Broking
GlaxoSmithKline Consumer - 3QFY17 Result Update - Weak Demand Accentuated by Demonetization - Reliance Securities
MOIL - 3QFY17 Result Update - Stellar Performance to Continue; Upgrade to BUY - Reliance Securities
Techno Electric & Engineering - 3QFY17 Result Update - Strong Quarter; Order Pipeline Remains Robust - Reliance Securities
J. Kumar Infraprojects - 3QFY17 Result Update - Decent Performance on Execution Ramp-up - Reliance Securities
Views on Sun Pharmaceutical Industries Limited 3QFY2017 Results: Angel Broking
All the queries put to rest at Infosys Press Conference: Angel Broking
Hindustan Zinc - 3QFY17 Result Update - Higher Zinc Prices Aid Earnings, but Valuation Expensive; Reiterate REDUCE - Reliance Securities
Mangalam Cement - 3QFY17 Result Update - Robust Volume Growth Aids Performance - Reliance Securities
Power Grid Corporation - 3QFY17 Result Update - Higher Capitalization Continues to Drive Growth - Reliance Securities
HeidelbergCement - 3QFY17 Result Update - A Quiet Quarter; Expect Improvement Ahead - Reliance Securities
Bank of Baroda - 3QFY17 Result Update - Asset Quality Pressure Continues to Persist; Downgrade to HOLD - Reliance Securities
Steel Authority of India - 3QFY17 Result Update - Higher Raw Material Cost & Lower Volume Dent Margins - Reliance Securities
Hindalco - 3QFY17 Result Update - Strong Performance Continues; Valuation Pricey - Reliance Securities
KNR Constructions - 3QFY17 Result Update - Beats Estimates on Better Execution - Reliance Securities
Ahluwalia Contracts - 3QFY17 Result Update - Strong Performance on All Parameters - Reliance Securities
NBCC - 3QFY17 Result Update - Better Operating Performance; Prospect Remains Bright - Reliance Securities
Goodluck India - 3QFY17 Result Update - Subdued Quarter; Better Times Expected as Input Prices Stabilize - Reliance Securities
Alkem Laboratories - 3QFY2017 Result Update - Angel Broking
Bank Of Baroda - 3QFY2017 Result Update - Angel Broking
Garware Wall Ropes - 3QFY2017 Result Update - Angel Broking
Views on GlaxoSmithKline Pharmaceuticals Limited 3QFY2017 Results: Angel Broking
J.K. Cement - 3QFY17 Result Update - Healthy Operating Performance amid Dismal Volume Growth - Reliance Securities
Jubilant FoodWorks - 3QFY17 Result Update - Too Fast Too Soon; Downgrade to HOLD - Reliance Securities
Sonata Software - 3QFY17 Result Update - Unimpressive Show; IITS Revenue Disappoints - Reliance Securities
JK Lakshmi Cement - 3QFY17 Result Update - Better Operating Performance on Cost Savings - Reliance Securities
Dr. Reddy's Laboratories - 3QFY17 Result Update - Long-term Fundamentals Remain Intact; Headwinds to Persist in the Near-term - Reliance Securities
Titan Company - 3QFY17 Result Update - Dazzles in Dark Times - Reliance Securities
Union Bank of India - 3QFY17 Result Update - Asset Quality Pressure Persists; Downgrade to HOLD - Reliance Securities
Ramco Cements - 3QFY17 Result Update - Healthy Operating Performance Continues amid Realizations Pressure - Reliance Securities
Hexaware Technologies - 4QCY16 Result Update - Solid Quarter, Deal Wins Strong; Client-Specific Issue A Negative - Reliance Securities
eClerx Services - 3QFY17 Result Update - Disastrous Performance on All Counts - Reliance Securities
Punjab National Bank - 3QFY17 Result Update - Asset Quality Pressure Recedes; Reiterate HOLD - Reliance Securities
HeidelbergCement India: 3QFY17 Result: FIRST CUT - Reliance Securities
Views on Lupin Limited 3QFY2017 Results: Angel Broking
Skipper - 3QFY17 Result Update - Transmission Capex Play; On Right Track - Reliance Securities
NTPC - 3QFY17 Result Update - Improving Performance on Operational Metrics - Reliance Securities
Navkar Corporation - 3QFY17 Result Update - Stable Performance; Strong Volume Growth on the Cards - Reliance Securities
Views on IPCA Laboratories Ltd 3QFY2017 Results: Angel Broking
State Bank of India - 3QFY17 Result Update - Operating Performance Improves; Maintain BUY - Reliance Securities
MBL Infrastructures - 3QFY17 Result Update - Performance Back on Track; Concerns still Prevail - Reliance Securities
Crompton Greaves Consumer Electrical - 3QFY17 Result Update - Well-positioned to cash in the expected double-digit growth in light electrical industry - Reliance Securities
Views on ICICI Bank Ltd 3QFY2017 Results: Angel Broking
Views on Tech Mahindra Ltd 3QFY2017 Results: Angel Broking
Shree Cement - 3QFY17 Result Update - Power Division Mars Performance - Reliance Securities
Godrej Consumer - 3QFY17 Result Update - Commendable performance; but priced in - Reliance Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2017