NEW DELHI: Delays in completing the Kochi-Mangalore pipeline is likely to impact capacity utilisation for Petronet LNG’s Kochi terminal, according to analysts, and add to a recent trend of rising gas imports due to low domestic production.
A recent report from brokerage Motilal Oswal Financial Services says that the impact of the pandemic has pushed back the completion of the Kochi-Mangaluru gas pipeline to the end of 2020 and this could result in capacity utilisation of the Kochi terminal falling from 30 per cent to 21 per cent in the third quarter.
While both the Dahej and Kochi terminals have begun operating at pre-COVID levels since the first week of June, this is due to “higher gas offtake from sectors like fertilizers and power, which are the clear leaders, while city gas distribution (CGD) is a laggard”, the analysts wrote.
Domestic gas production, meanwhile, is down 10 per cent year-on-year in August and 13 per cent lower for the fiscal year to date.
However, total gas consumption has only fallen 8 per cent year-on-year in August and 3 per cent YTD, which has resulted in the share of gas imports rising to 58-59 per cent during the period compared to the 52 per cent five-year average.
“We expect imports to increase further as demand from refining and other segments normalize in the coming months, aided by new fertilizer plants,” the brokerage said, adding, “(if) domestic gas production remains hushed and CGD demand returns to pre-Covid levels (of ~30.5mmscmd), imports could form ~60 per cent of total consumption”.