Petronet LNG, GAIL, GSPL Share Prices: Will Spike In LNG Prices Impact Natural Gas Stocks?

Nifty oil and gas stock traded higher on Tuesday at the time of writing. The index is in focus after the recent hike in LNG prices, which is likely to take a toll on a couple of natural gas players despite demand continuing to be robust. The hour of focus is none other than GAIL, GSPL, and Petronet LNG share prices.

As per JM Financial report, India's gas demand remained robust at 197mmscmd in Apr'24 (vs. 195-196mmscmd during Jan-Mar'24) led by strong LNG demand in the power segment. India's LNG demand continued to strengthen in Apr'24 with sustained moderation in spot LNG prices, driven by power, CGD and fertiliser segments. CGD sector gas demand improved slightly MoM as LNG demand rose to offset the reduction in APM gas allocation.

However, the brokerage also pointed out that Asian spot LNG price has risen recently to ~USD 12/mmbtu (or in line with a historical average of ~15% of Brent) on account of continued strong cooling demand amidst high temperatures in Southeast Asia and China.

In JM Financial's view, though spot LNG price is still relatively lower vs. other alternative fuel prices, it is at a premium vs. LPG/Propane price. Further, European gas prices are also trading higher at USD 10-11/MMBtu and US HH gas prices rose to ~USD 2.8/MMBtu.

It further explained that sustained rise in Asian spot LNG prices could be a concern for all gas companies, particularly for CGD companies like Gujarat Gas (given its 20-30% dependency on spot LNG) as a) spot LNG pricing power vs. propane has reduced recently; and b) the low-cost APM gas allocation is also gradually declining for the CNG/domestic PNG segment. Further, this can impact domestic LNG demand and, hence, volume for Petronet LNG, GAIL and GSPL.

Also, the brokerage believes that separately a sharp rise in US HH gas price (relative to spot LNG price and crude-linked LNG) can adversely affect the trading margin of GAIL's US HH-linked LNG contracts.

GAIL Share Price:

GAIL's share price traded at Rs 209.54 apiece, up by 0.65% on NSE, at the time of writing. The stock was near its day's high of Rs 210.20 apiece. The stock's 52-week high and low are at Rs 233.20 and Rs 103.30 apiece respectively.

GAIL's businesses consist of the transmission and marketing of Natural Gas and GAIL is also involved in the transmission of LPG and manufacturing of Petrochemicals and Liquid Hydrocarbon.

Petronet LNG (a JV of GAIL) operates two LNG regasification terminals at Dahej & Kochi. GAIL is also the promoter of Konkan LNG Private Limited which operates an LNG regasification terminal at Dhabol with a design capacity of 5 MMTPA.

As per JM's data, GAIL's Konkan LNG plant in Dabhol has a capacity utilisation of 42.7% by FY24, while its capacity is at 5MMTPA.

Petronet LNG Share Price:

The stock traded at Rs 310.20 apiece, up by 2.5% on the NSE. The stock was near its day's high of Rs 311.25 apiece as well. While its 52-week high and low are at Rs 323.15 and Rs 191.70 apiece respectively.

Petronet LNG Limited is an Indian oil and gas company formed by the Government of India to import liquefied natural gas (LNG) and set up LNG terminals in the country. By FY24, the capacity utilisation of Petronet LNG's Dahej plant was 95.1% with a capacity of 17.5 MMTPA.

GSPL Share Price:

This stock traded at Rs 294.25 apiece, down by 0.5% on NSE, The stock's 52-week high and low is at Rs 406.75 apiece and Rs 254.50 apiece respectively.

Gujarat State Petronet Limited (hereinafter referred to as "GSPL" or "Owner") is a Limited liability company incorporated under the provisions of the erstwhile Companies Act 1956, engaged in the business of transportation of natural gas through pipelines connecting the various supply and demand centres in Gujarat.

YTD, GAIL stock is up by 26% on NSE, while Petronet surged by 38%. However, GSPL stock is down by 8%.