More than one lakh trucks should run on LNG in five years: Prabhat Singh, MD & CEO, Petronet

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Published: January 22, 2020 3:30:49 AM

On a per-kilometre basis, taking into account engine efficiency and other factors, there is a minimum savings of 20% for LNG-fuelled transportation vehicles.

Prabhat Singh, MD & CEO, PetronetPrabhat Singh, MD & CEO, Petronet

Petronet LNG is engaged in the business of liquefied natural gas (LNG) re-gasification and natural gas trading. It owns LNG terminals in Dahej and Kochi. With the government’s focus of increasing the share of gas in the energy basket, Petronet expects the transportation sector to adapt to LNG owing to its cost effectiveness. Prabhat Singh, MD and CEO, Petronet, tells FE’s Anupam Chatterjee why and how the company wants to foray into bulk LNG supply to fuel retail outlets. Excerpts:

Apart from your core verticals, are you exploring any new business areas to venture into?
We are actually the first business entity to focus on long distance heavy duty trucks and inter-city buses that run on LNG. Around 2.5 lakh new trucks come on road every year. Even if we do not target the existing trucks which run on diesel, about 7 million tonne (mt) of LNG would be required for the new trucks every year if they run on this fuel. If we add the 80,000-85,000 new buses that are added every year, we will need another 2 mt. So, 9 mt of new LNG business is for the taking in the transport sector. We had proposed this to the government and we have received the necessary clearances. We have bought four buses – two each in Dahej and Kochi – as pilot to showcase the efficacy. The first bus that has been registered in India with LNG fuel type is in Dahej, and it will be showcased in Delhi on January 23. We will get the buses in Kochi registered as well. The buses in Dahej are already plying to commute our employees to work.

What steps are you taking to promote LNG-based transportation?
By 2021, we should be putting up about 50 retail LNG fuel outlets for transportation. We estimate 5,000-6,000 trucks to be retrofitted for LNG. In the second phase, we want to take the number of retail outlets to 300 by 2024. Beyond that, the number should go up to 1,000. In the next 4-5 years, more than 1 lakh trucks should run on LNG. This is a big ticket vertical that we are digressing into by facilitating the retail aspect. However, we do not want to continue to stay in retail LNG supply as there are oil marketing companies (OMCs) which are better equipped to run this business. By invoking this, we want to be in the business-to-business (B2B) domain of bulk LNG supply. To that end, we are expanding our truck loading facilities in Dahej and Kochi. We are also expanding other infrastructure to be a robust wholesale supplier of LNG.

Why do you think road transporters would choose LNG over the dominant fuels in the market?
On a per-kilometre basis, taking into account engine efficiency and other factors, there is a minimum savings of 20% for LNG-fuelled transportation vehicles. The benefit can go up to 30%. The advantage is, you need way lesser retail outlets for LNG, as the mileage is far better. One fill of LNG can take a loaded LNG truck to around 900 km, while a diesel truck needs a fuel refilling station after every 400-500 km. Today, we have around 70,000 petroleum retail outlets and we are already planning to double that. Even if we have 1,000 LNG filling stations, they can cater to around 1.5 lakh trucks across the country.

What plans do you have to upgrade your existing infrastructure?
We are working on two more tanks and a third jetty in Dahej. This will lead to better utilisation, over and above the current 17.5 mt. After that, we plan to increase the capacity to 20 mt, by around 2024. The Kochi – Mangalore pipeline, as we have been told by Gail, should be commissioned by March. That would theoretically open up nearly 40% of the capacity of our terminal. But we anticipate nearly 25-30% additional utilisation will start happening. At the same time, we have to make sure it does create bottleneck for re-gasification operations and that needs expansion as well. Utilisation levels would rise when customers pick up more molecules. Contrary to the seasonal trend, gas prices in January-February are lower this year. So, now people want more gas but availability of cargoes is an issue. One LNG ship cargo carries 80–90 million cubic metres of gas. There are long-term cargoes which are supplying on a regular basis, but situations like this, you need spot cargoes as well.

Any new update on the Tellurian deal?
It is important to understand that we had signed a non-binding memorandum of understanding on this deal. We have explored the concept of procuring gas at well-head price, where the fuel is valued on a cost-plus basis. Today gas is abundantly available and it is a buyers’ market. It is now a situation where price is secondary and the seller is keener to find an off-taker for the molecules. We want to exploit this consumer-friendly business scope. There are many companies all over the world which are offering the fuel under the cost-plus model. No doubt with Tellurian we have progressed quite a lot, but we are in discussion with a lot of companies. We have Rs 5,000 crore of cash reserve and with our kind of profitability, we can venture into viable $500 million business opportunities. If we, as customers, do not leverage this, we are going to miss out on the golden era of gas. We are forcing producers to look at the market beyond arbitrage and premium. We are providing them a location to park their molecules.

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