Petronet LNG's Q2 net profit rises 53% to Rs 1,235 crore, LNG throughput increases
Petronet LNG reports record Q2 profits despite Strait of Hormuz disruptions, driven by operational efficiency and alternative supply routes.
Petronet LNG Q2 profit has seen a massive surge, with the company reporting a 53 per cent year-on-year increase in its net profit, reaching Rs 1,235 crore for the second quarter of FY27. This achievement comes despite significant geopolitical headwinds and supply disruptions stemming from the ongoing crisis in the Strait of Hormuz.
Record-Breaking Financial Performance
The company's financial health showed strong growth across multiple metrics during the July–September quarter. The Profit Before Tax (PBT) climbed by 53 per cent to Rs 1,659 crore, up from Rs 1,083 crore in the same period last year. Meanwhile, the Profit After Tax (PAT) rose from Rs 806 crore to Rs 1,235 crore.
These figures mark the highest-ever second-quarter PBT and PAT for the company. The momentum continued into the first half of the fiscal year, where Petronet recorded a 43 per cent jump in PAT to Rs 2,368 crore, compared to Rs 1,656 crore a year earlier. PBT for the first half also saw a rise, reaching Rs 3,174 crore from Rs 2,219 crore. Management has attributed this impressive growth to enhanced operational and commercial efficiencies.
Navigating the Strait of Hormuz Crisis
The geopolitical instability in the Strait of Hormuz created challenges for LNG supplies, particularly those coming from Qatar. However, Petronet LNG Managing Director and CEO Akshay Kumar Singh explained that the company successfully maintained availability at its terminals by leveraging alternative supply arrangements.
Addressing queries regarding the source of these alternatives, Singh clarified the company's relationship with US-based supplies. He stated that while Petronet LNG does not directly procure liquefied natural gas from the United States, its long-term capacity holders do. These holders source American LNG and bring it to Petronet's terminals for regasification, after which they market the products themselves.
Long-Term Supply Security
To ensure long-term stability, Petronet relies on several key agreements:
- Qatar: A long-term agreement covering 7.5 million tonnes of LNG, valid until December 2048.
- ExxonMobil: A supply agreement for 1.425 million tonnes per annum signed in 2017–18, continuing until 2034–35.
- ExxonMobil Asia Pacific Private Limited: An agreement for 1.2 million tonnes starting in 2026 and lasting until 2040–41. Deliveries have already begun at 50 per cent volume and are expected to hit full capacity within two to three years.
Singh noted that while the Qatar contract was impacted by the Hormuz crisis, additional cargoes through other regasification arrangements offset the shortfall. Furthermore, supplies from the Australian contract with ExxonMobil remained entirely unaffected.
Operational Growth and Terminal Expansion
The company is also preparing for future growth through the expansion of its Dahej terminal, where annual regasification capacity has been increased from 17.5 million tonnes to 22.5 million tonnes. To support this expanded capacity, various LNG offtakers have signed long-term and medium-term supply agreements covering approximately 10–12 million tonnes over the last 18 months.
In terms of throughput for the September quarter, Petronet processed 231 trillion British thermal units (TBTU), a slight increase from 228 TBTU in the previous year's corresponding quarter and 207 TBTU in the preceding quarter. The Dahej terminal specifically processed 216 TBTU. While capacity utilisation stood at 73 per cent (down from 92 per cent last year), the company noted that this calculation reflects the now-larger expanded capacity base.
Adding to the positive news for shareholders, the company's board has approved an interim dividend of Rs 7 per share.