DFPCL, Petronet LNG Sign ₹1,200 Cr Deal for 5-Year Supply
In a significant development, Deepak Fertilizers & Petrochemicals Corp Ltd (DFPCL) has signed a 5-year agreement with Petronet LNG Ltd (PLL) for the regasification of approximately 25 trillion British thermal units (TBTUs) of liquefied natural gas (LNG) annually. The deal, worth ₹1,200 crore, will primarily take place at the Dahej terminal, ensuring a steady supply of LNG to DFPCL’s Taloja facility and strengthening its long-term energy security.
As per the agreement, DFPCL has agreed to pay PLL a fixed fee for the regasification services, which will be provided by PLL’s Dahej terminal. The deal includes a 20% additional outlay provision, allowing DFPCL to adjust the volume of LNG regasified as per its requirements. This flexibility will enable DFPCL to optimize its energy needs and reduce its dependence on spot LNG markets.
The deal is expected to benefit both parties in the long run. For DFPCL, the agreement ensures a stable supply of LNG, which is critical for the production of fertilizers and other petrochemicals. The company’s Taloja facility is a significant contributor to India’s fertilizer production, and the steady supply of LNG will enable it to maintain its production levels and meet the growing demand for fertilizers.
For Petronet LNG, the agreement provides a steady revenue stream and reinforces its position as a leading LNG regasification player in India. The company’s Dahej terminal is one of the largest LNG regasification facilities in the country, with a capacity to regasify 25 million metric tons of LNG annually. The deal with DFPCL will help PLL utilize its capacity more efficiently and generate additional revenue.
The deal is also expected to have a positive impact on the Indian fertilizer industry as a whole. Fertilizers are a critical input for agriculture, and a stable supply of LNG will enable DFPCL to maintain its production levels and meet the growing demand for fertilizers. This, in turn, will support India’s agricultural growth and food security.
In recent years, the Indian fertilizer industry has faced challenges due to fluctuations in global LNG prices and a lack of domestic LNG production. The deal between DFPCL and PLL is expected to mitigate these risks and provide a stable supply of LNG to the industry.
The deal has also had a positive impact on the stock market. DFPCL’s shares rose by over 10% on the news, making it a multibagger stock in the short term. The company’s stock price has been on an upward trend in recent months, driven by its strong financial performance and growth prospects.
In conclusion, the 5-year agreement between DFPCL and PLL is a significant development for the Indian fertilizer industry. The deal provides DFPCL with a steady supply of LNG, which is critical for its production of fertilizers and other petrochemicals. For PLL, the agreement provides a steady revenue stream and reinforces its position as a leading LNG regasification player in India. The deal is expected to have a positive impact on the Indian fertilizer industry as a whole, supporting agricultural growth and food security.
