The Hindu Business Line : Petronet in talks for strategic partner

New Delhi April 14 Petronet LNG Ltd (PLL) is looking for a strategic partner, preferably one with access to natural gas resources. "With liquefied natural gas (LNG) spot cargo business boosting the company's revenues, we would prefer a partner who could also be a source for LNG," a senior PLL official told Business Line.

Apart from Qatar Investment Agency (QIA), PLL is also in talks with three to four other strategic investors to come in as a partner in the company, the official said, but declined to disclose the names of the companies. Meanwhile, the consultant appointed by QIA has already completed the due diligence and PLL expects a decision by the end of this year.

Qatar was offered an opportunity to subscribe for Petronet's $100-million foreign currency convertible bonds (FCCB), which upon conversion into equity shares would translate into 7.5-12.5 per cent equity stake. However, with higher revenues being generated from spot cargoes the company's requirements for financial support has also come down, the official said. Besides, FCCB is more for bringing in a strategic partner than a financial investor, he explained. The FCCB is to part-finance PLL's Kochi terminal.

Elaborating on the spot cargo sourcing, the official said during the third quarter of 2006-07 alone, the company sourced four spot cargoes at internationally competitive prices. This had further strengthened its presence in the international LNG spot market. PLL expects to close the year 2006-07 with 12 spot cargoes at a competitive price — close to $8 per million British thermal unit (mBtu).

During the financial year 2007-08, the company expects to source 24 spot cargoes. The current spot rates for LNG are between $8 and $9 per mBtu.

For the third quarter ended December 31, 2006, PLL had posted a 70 per cent increase in net profit at Rs 85.1 crore. The company clocked a 53 per cent jump in turnover at Rs 1,585 crore for the quarter over the corresponding period last year. PLL said that it would account for approximately 33 per cent of the total gas supplies by 2011.

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