Oil stock jumps 4% after signing 15 year deal with ONGC for ethane facilities

Synopsis: The stock rose after a 15-year ethane infrastructure deal boosted long-term revenue visibility through new storage and jetty facilities. Despite softer quarterly numbers, steady terminal operations, rising utilization, aggressive capex, and improving global LNG supply outlook continue to support future growth prospects.

The shares of prominent energy company gained up to 4 percent in today’s trading session after the company entered into a 15-year ethane unloading, storage, and handling (USH) services binding term sheet with Oil and Natural Gas Corporation (ONGC).

With a market capitalization of Rs 41,745.00 crore, the shares of Petronet LNG Ltd were trading at Rs 278.30 per share, increasing around 3.48 percent as compared to the previous closing price of Rs 268.95 apiece.

Ethane Infrastructure Expansion

The shares of Petronet LNG Ltd have seen bullish movement after it signed a 15-year ethane services pact with Oil and Natural Gas Corporation. The project includes a 1.7 lakh cubic metre ethane storage tank and a new third jetty at Dahej, Gujarat, capable of handling ethane, propane, and LNG, strengthening long-term revenue visibility.

Furthermore, Petronet LNG Limited is set to unlock long-term revenue visibility with a 15-year contract expected to generate around  Rs 5,000 crore in gross revenue, starting from FY 2028–29. The under-construction third jetty at Dahej will handle ethane, propane, and LNG, making it India’s first such multipurpose facility. This project strengthens infrastructure, supports third-party imports, and enhances future growth potential.

Additionally, ONGC plans to import ethane using Very Large Ethane Carriers of about 100,000 CBM capacity to ensure steady feedstock for ONGC Petro Additions Limited. The Dahej complex houses one of India’s largest ethylene crackers, making long-term capacity booking critical for uninterrupted operations and petrochemical output stability.

Financial & Operational Highlights

The company reported a moderate slowdown in Q2FY26 performance. Revenue declined 15% year-on-year to  Rs 11,009 crore, indicating softer business activity during the quarter. Profitability remained relatively resilient, with net profit slipping only 5% to  Rs 830 crore, suggesting some stability in margins despite the drop in sales.

The company’s operational performance remained steady in Q2, led by strong activity at the Dahej terminal, which processed 211 TBTU and generated  Rs 754 crore in regasification revenue. The Kochi terminal hit a record 27% utilization, driven by fresh cargoes from BPCL. Management expects further improvement post pipeline connectivity, though LNG price trends will remain a key factor.

The company’s petrochemical project is progressing at full pace, with all major long-lead equipment packages already awarded and civil work underway on site. Total FY26 capex is guided around  Rs 5,000 crore, largely driven by this project. Over  Rs 600 crore has been spent so far, with most of H1 FY26 capex already allocated to petrochemicals, while FY27 is expected to see even heavier spending.

Indian companies have signed new long-term LNG contracts, most of which will utilise capacity at the Dahej terminal, adding stability to regasification volumes and reducing dependence on volatile spot cargoes. Management expects global LNG supply to improve by late 2027 or early 2028, which could lower prices and drive a meaningful rise in terminal utilisation. Petronet, however, has no immediate plans to lock long-term LNG on its own balance sheet.

Petronet LNG Ltd is India’s largest LNG importer and regasification company, playing a key role in the country’s natural gas infrastructure. It operates major LNG terminals at Dahej and Kochi, supplying gas to power, fertilizer, city gas, and industrial sectors across India.

Written by Abhishek Singh

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