Petronet LNG operates India's largest LNG regasification terminals at Dahej and Kochi, earning tolling fees from long-term customers such as GAIL, IOCL, and BPCL. The Dahej terminal, expanded to 22.5 MMTPA in March 2026, processed 192 TBTU in Q1 FY27, implying a utilization of 65.6% on the expanded base, while Kochi ran at 23.37%. The business model is high fixed cost with operating leverage: regasification revenue in Q1 FY27 was INR 1,214 crore, supplemented by trading gains of INR 301 crore and inventory gains of INR 193 crore. With only a handful of large terminals in India, Petronet's scale and low cost position give it a structural advantage, though the recent Gulf crisis has temporarily depressed throughput.
The economics persist because of long-term take-or-pay contracts and infrastructure that is difficult to replicate. Dahej has evacuation capacity of 35 MMTPA against regas capacity of 22.5, and eight storage tanks, unique in India, providing flexibility to offtakers. The company has signed new long-term supply deals with ExxonMobil (0.5 MMTPA starting April 2026) and Equinor (starting May 2026), adding about 1 million tons in FY27. Tariff renewals with existing offtakers for the 7.5 MMTPA capacity are expected to close in the next 2-3 quarters, and the ONGC regas agreement is being converted to a long-term contract. These contractual anchors, combined with the high capital cost of building competing terminals, create a durable tolling franchise.
The inflection is the combination of capacity expansion, new contracts, and the petrochemical project. Dahej's expansion to 22.5 MMTPA is complete, and the third jetty (INR 600 crore) and additional storage tanks (INR 1,200 crore) are under construction. The Kochi-Bangalore pipeline, now expected to achieve mechanical completion by end of Q4 FY27, should lift Kochi utilization from 23% toward 60% as it connects to the national grid. The petrochemical plant, with 40% physical progress as of Q1 FY27, is on schedule for commissioning in the next 18-24 months, with a total approved capex of INR 20,685 crore. By mid-2028, Dahej should be running at 90%+ utilization (it was 108% in Jan-Feb 2026 before the crisis), Kochi should be materially higher, and the petchem plant will add a new revenue stream. Management plans INR 9,064 crore capex in FY27 and a similar amount in FY28, funded largely from internal accruals while maintaining a 40-50% dividend payout.
Management's delivery record is mixed. The Dahej expansion was completed on time by March 2026, but the Kochi pipeline timeline slipped from June 2026 to end of Q4 FY27. FY26 capex was cut from an initial INR 5,000 crore guidance to INR 3,000 crore, and petchem commissioning has moved from Q4 FY28 to Q1 FY28 (or later, given 40% progress). Volume guidance has been soft: 9-month FY26 Dahej throughput was 632 TBTU versus 686 TBTU in FY25, down about 8% due to the Qatar force majeure. However, management has maintained the dividend and reiterated the FY27 capex plan, and the new contracts with Exxon and Equinor are delivering cargoes as promised. The tariff renewal discussions are ongoing, and the company expects closure in 2-3 quarters.
The earnings path over the next 18-24 months hinges on utilization recovery and petchem commissioning. If Qatar supplies resume (management expects within 3-4 weeks of conflict end) and Dahej returns to 90%+ utilization, regas volumes could reach ~20 MMTPA, with regas revenue around INR 4,800 crore annually based on Q1 run-rate. The petchem plant, once commissioned, could add significant EBITDA, though no specific numbers are provided. The key watchpoint is the Strait of Hormuz and Qatar force majeure; a prolonged disruption would keep utilization depressed and trading gains volatile. Additionally, tariff renewals must conclude without major reductions to preserve margins. The tension between lower volumes and higher gross margins (due to trading gains) is temporary; the structural driver is the capacity expansion and new contracts, which should restore operating leverage once geopolitical disruptions subside.
companyname: Petronet LNG Limited ticker: PETRONET sector: Oil & Gas / LNG Petronet LNG operates India's largest LNG import and regasification business. It owns two terminals: Dahej in Gujarat (17.5 MMTPA nominal capacity, being expanded to 22.5) and Kochi in Kerala (5 MMTPA). The company accounts for roughly 34% of gas supplies in India and handles about two-thirds of the country's LNG imports, per the FY2025 annual report. It was formed as a government initiative, a joint venture of GAIL, ONG...
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