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GAIL (India) Ltd
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Ladies and gentlemen, good day, and welcome to the GAIL (India) Limited Q1 FY '23 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Probal Sen. Thank you, and over to you, sir.
Thank you, Seema. Thank you, everyone, for making the time to attend this post Q1 '23 financial results call of GAIL (India) Limited. We are pleased to have senior members of GAIL India's management led by Mr. Rakesh Kumar Jain, the CFO, with us. I will hand over to him immediately for some opening remarks and a brief on the numbers, and then we can move into the Q&A. Sir, over to you.
Thank you, Probal. Good afternoon, Mr. Probal, from ICICI Securities and my dear friends, investors and analyst community. A very warm welcome to GAIL's Earnings Call for Q1 Financial Year '23. We are thankful to you all for showing keen interest in this earnings call. The results for first quarter have been declared earlier today, and I'm sure that you would have gone through this.
Before I give insights on the financial performance, I'm happy to inform you that our company has received nil comments from CEG on the account -- on the financial year '21-'22, this is the 13th consecutive occasion when the company has been able to achieve this feat.
Now let me take you through financial highlights. GAIL achieved gross turnover of INR 37,536 crores in the current quarter as against INR 26,909 crores in Q4 financial year 2022. This is an increase of almost 39%, and the increase is mainly due to higher natural gas marketing and transmission volume, higher gas prices both domestic and RLNG, higher LST prices, LST prices are higher by average almost INR 12,000 per metric ton; higher petrochemical prices, this is higher approximately by INR 18,500 per metric tonne.
Our -- this hike is partly offset by lower PC sales quantity in Q1 '23, due to annual shutdown of petrochemical plants in the current quarter, that is quarter 1. Profit before tax increased to INR 3,894 crore in current quarter as against INR 3,546 crores in Q4 financial year 2022. This is an increase of 10%, and the increase is mainly due to, as I said, with respect to revenue. The improved performance of Gas Marketing segment.
However, this was partly set off due to reduced profitability in gas transmission, Liquid Hydrocarbon segment due to increase in price of domestic gas used in internal consumption that increase is well known to you that is $2.9 per MMBtu to $6.10 per MMBtu. Pet-chem profit also reduced in spite of higher prices and realization. And this reduction is due to lower production, as I said in Q1 '23, and sales and higher cost of input gas during this quarter. Profit after tax increased to INR 2,915 crores as against INR 2,683 crores in Q4 '22, financial year '22, and this is an increase of 9%, and on similar accounts, as I stated with respect to PVD.
Segmental performance for the current quarter versus previous quarter. Our gas marketing volume stood at 100.84 MMSCMD in the current quarter as against 94.69 MMSCMD in previous quarter. And the increase in volume is driven by our LNG sales and also overseas sales. The natural gas transmission volume stood at 109.47 MMSCMD in the current quarter as against 107.56 MMSCMD in the previous quarter. The capacity utilization for pipeline is 53% as compared to 52% in last quarter. Polymer production stood at 132 TMT as against 194 TMT in last quarter. And this 132 is almost same if we compare with the Q1 '22 because we had -- and was shut down in both the Q1 '22 and '23.
However, if compared it with the Q1 of last year -- sorry, we have experienced very high PC prices, as I said, in current quarter, the average PC price is 126,000 metric tonnes. With respect to LSC, the production stood at 227 TMT as against 212 TMT in previous quarter, the capacity utilization was 64%. Liquid hydrocarbon price increased significantly, and the average realization in the current quarter was INR 74,100 per metric ton. Cost of input gas for LSC segment is primarily driven by domestic gas prices. From April '22, the cost of input gas prices increased to $6.10 per MMBtu from $2.90 per MMBtu, which led to increase in cost of production.
In respect of LPG transmission, transmission was 1,055 TMT as against 1,065 TMT in previous quarter, almost the same. The capacity utilization was at 110%.
Coming back to the consolidated financials of Q1 '23 as compared to Q4 '22, financial year '22, the consolidated turnover in the current quarter stood at INR 37,901 crores versus INR 27,263 crores in previous quarter, almost 39% up. The PBT in the current quarter is INR 4,230 crores versus INR 4,375 crores in Q4 financial year 2022, down by 3%. The PAT is INR 3,253 crores versus INR 3,454 crores in Q4 financial 2022, down by 6%.
With respect to GAIL CGD. That is a 6 CGD we are operating in GAIL. And in terms of infrastructure, we have 121 PNG stations. In terms of DPNG connection, we have 218,000 DPNG collections. And during the quarter 1, Q1 '23, 1 new CNG station and 17,000 new DPNG connections were added.
And now with respect to GAIL Gas, during the current quarter, the gross turnover stood at INR 2,658 crores as against INR 2,102 crores in Q4 financial year 2022. This is an increase of 26% and again, mainly driven by increase in average gas price. The PBT was marginally down at INR 97 crores in current quarter as against INR 103 crores in previous quarter. Profit after tax also declined marginally to INR 72 crores at against INR 74 crores in previous quarter. The physical volume during the quarter remained flat at approximately 6 MMSCMD. GAIL Gas along with its JV, subsidiaries has an infrastructure of 8 lakh DPNG connections and 341 CNG stations. During the quarter 2, new CNG stations and 21,000 new DPNG connections were added.
In terms of CapEx, GAIL achieved CapEx of approximately INR 1,975 crores during the current quarter. This is mainly on account of pipelines, petrochemicals, CGD projects, operational CapEx, equity contribution and E&P. We have planned to spend approximately INR 7,500 crore in current financial year, and mainly on again, pipeline, petrochemical, CGD and equity. With respect to project performance, 121-kilometer of Bokaro-Angul mainline commissioned on 30th June 2022, 412-kilometer was commissioned till March 2022. So Bokaro-Angul Pipeline, now is making total 533 kilometer. This was inaugurated by honorable CM on 1st July 2022.
The work along various projects, PP projects at PATA, PDH-PP at Usar is going on as per sure. That's all from my side regarding the overview of performance and projects. The management, the team of Executive Directors from all these segments are available here. And will be glad to clarify on any questions that you may have. Now over to you, Mr. Probal.
Thank you very much, sir. Seema, we can open up the floor for the Q&A.
[Operator Instructions] We take the first question from the line of Maulik Patel from Equirus.
This is regarding the LNG volume. For the quarter, can you see how much of the cargoes you received from the U.S. and Gazprom.
Q1?
Yes.
I cannot give the exact breakup of the Q1 cargoes, but overall, we did purchase from both the U.S. and other suppliers from the -- which are Brent-linked contracts. And we did also purchase some spot cargoes to meet our spot gas requirements in the market.
Sir, this is with respect to this news in the media that Gazprom has declared the force majeure, and there is about 2.5 million tonnes of contracts, they are not supplying the cargoes since month of June, I think. So what can the impact of that? I wanted to know that have you sold out of this 2.5 million tonne, how much of the volume has been sold to the customers? And in those contracts, whether it was mentioned that it is on the Gazprom volume. And the force majeure from the Gazprom will also applicable to the customers or not?
Yes. Let me take this question. As you know that we have total portfolio of 14 MMTPA of LNG. And for current year, Gazprom is supposed to supply 2.5 MMTPA of LNG. That if you work out, it will -- they actually are supposed to supply almost 36 cargoes during this calendar year because LNG contracts are on a calendar year basis. And -- but there has been certainly supply disruptions and it has happened since late May 2022. When I'm saying so, it means till almost May the cargoes were coming.
And if you talk to me till date, till date Gazprom has not supplied almost 8 cargoes, 8 cargoes. 8 number of cargoes, if you talk to me till today, okay. Though supply disruption started sometime in May, but again between also gave 1 cargo to us in June. So this is what about the current situation, the portfolio what we have total. The contract we have with Gazprom and the supply situation till date.
So Gazprom has not declared a force majeure. It is that they are not able to supply the cargoes?
Yes, Gazprom what they have said, basically, their regulatory -- basically, this has now become a company based out of Germany because we had a contract with Gazprom within the constitution or [indiscernible]. So in order to secure the supply for Europe, they are not certain about supplying LNG under this contract. They have not said no that they will not supply, but they are not [ churning ] at the moment.
Sir, how are they dealing with institution because the 8 cargoes are not a small number. I think it has impacted our -- the volume, and we have probably sold a large part of this 2.5 million tonnes to the customers. So -- are we obliged to make this volume on those sources of gas from the GAIL? Or how is the situation with customer? And how are you dealing with that?
Yes, you're right. The situation is certainly an area of concern, if I talk to you today. I cannot say what will happen in future. If I talk to you right now when I'm talking to, certainly, it's a concern. So what GAIL is doing, GAIL is actually honoring its contract. What we are doing in order to honor the contract, all contracts have take-or-pay levels -- so take-or-pay levels are normally for the user. There are below level also -- so we have started supplying our volumes at the take-or-pay level. Okay. So that take-or-pay level is enabling us -- that is one solution I'm telling you right now how we are meeting it. The take-or-pay level is enabling us to deal the situation partly.
Secondly, we ourselves has cut down the load for our Pata petrochemicals. So that is also helping us. Thirdly, what we have done, we have started -- though we were otherwise doing this as a course of risk mitigation or bringing cargo in advance or taking later. So we have been doing some time swaps. So we are advancing our cargoes through swaps, which are supposed to come, say in '23. We have done some of the transactions, that is fourth -- third.
Fourth, what we have done, we had some unallocated cargoes at United States. So we are -- we have hired ships for that, so that the [indiscernible] cargo, which we were thinking at that point of time, we can use the arbitrage, sell in the international market. We are thinking that with those ships, we will bring the cargoes to domestic market in order to mitigate the situation. And lastly, if we still feel that there is some shortage, we'll go for a spot purchase to meet the requirement.
So does this impact our profitability in a significant manner, given that we are the Gazprom contract that whatever [ 13, 14% ] of the oil price. And you are buying some of this volume, which is in the spot market, which is substantially higher, will this impact our profitability in a significant manner [indiscernible] business?
Yes. So again, we are talking as of today. So you can say that profitability certainly will hit not significantly, let me again explain in detail. Certainly, there will be an impact on profitability. Nobody can deny if the situation remains like what we are talking today. And we -- that's how we are mitigating this situation or overcoming this situation through various measures. We are avoiding -- by doing these measures, we are avoiding purchase of spot cargoes. But what has happened, this volume, which is not coming from Gazprom is almost 7% to 8% of our total portfolio, correct? So to that extent, in order to meet that, we have started using take-or-pay levels.
So suppose because there are different take-or-pay levels in different contracts. Suppose we are reducing to 90%. So to that extent, the marketing volume and transmission volume has come down as of today. And if situation persists, certainly will be there lower in tomorrow. Tomorrow, I cannot say what will happen, but I'm only hypothetically extrapolating this situation. But as of today, yes, we have cut down the supplies to take-or-pay levels. So it is -- to that extent, certainly there is an impact.
You mentioned that it is 7% to 8%. It is actually, sir, 14%, 15%, right? You have a 14 million tonnes of LNG commitment and this is 2.5 million tonnes. So approximately 15% kind of a number?
Yes. Yes. Yes. Let me tell you I said in terms of total volume, if you go over RLNG, yes, it's 15%. So if it is 15%, 10%, we are cutting through take-or-pay then we are doing other majors which I explained you in detail.
Sure. Got it. Got it, sir. Sir, one more question, if you allow me -- sir, how do you see this international prices, which has gone through the roof spot? And country is also having -- the consumption is also coming down, particularly the volume at CGDs are under pressure, given that the brand has gone down to -- gone up to around $10.5 per MMBtu. So if those industries are not able to afford this kind of, how do you see this overall gas demand in the country? And also in the context of upcoming this MJ field auction, which Reliance probably will do in the next couple of months. In that context, how do you see this LNG demand or LNG import in the country's view?
Okay. If you talk of today's spot LNG price, nobody is going to come up. As far as the new convergence certainly will take a hit. But the plants which are already on gas will somehow are taking because they are on a long-term basis, they have some spot contracts. But if you talk of new convergence, certainly there will be an impact on new convergence until the situation improves.
We take the next question from the line of Pinakin Parekh from JPMorgan.
Sir, just to continue the previous point, you mentioned implementing take-or-pay in lieu of the lost gas from cargo. So what does that mean sir, you are paying the consumer the differential in price?
The take-or-pay level, [Foreign Language] Take-or-pay level is for consumer first. If consumer does not take that quantity, we have right to put take-or-pay gas price. But there is one more level supply-or-pay, which is normally below take-or-pay level. So in terms of contract, we are complying the contract. We are paying even more -- we are supplying the quantity more than the quantity we are required to comply the contract. So there is no question that GAIL will pay for differentials.
Understood. So sir, [Foreign Language] if for assuming the 2.5 million tonne Gazprom cargo is not available through the course of F23, the quarter 1 trading gas marketing EBITDA should sustain, sir, for the rest of the year on a quarterly basis, around INR 2,500 crores?
So quarter 1 EBITDA will have some concern if you talk of quarter 2. Let me tell you very frankly. Because quarter 1 did not have that impact again on basis of hypothesis that Gazprom cargo will not come in Q2. If we continue with that hypothesis, so certainly, more number of cargoes will not come in Q2. And to that extent, our marketing and transmission volume will have an impact and certainly will have an impact on our marketing EBITDA and marketing spend whatever you call it.
Okay. Sir, marketing EBITDA will turn lower versus Q1 because of the lack of Gazprom volume. But to give you a sense, sir, last year second quarter marketing EBITDA was INR 1,100 crores. This year, it is INR 2,400 crores. So it's fair to say that the second quarter should be somewhere in between, even without the loss of Gazprom model.
Actually, again, it's a very, very tough -- or very, very difficult question to answer. We said in one of the earnings calls for yearly earnings call we had in Mumbai and also -- Mumbai, yes, or investors meet that on a yearly basis, we said we will be able to earn INR 2,500 crores at least on marketing margin, that we said. But if we talk of Q2, certainly INR 1,100 crores, we should achieve. But again, it depends on what will happen on all those accounts because we don't know the way the LNG prices are behaving really, it is tough to give you any number.
Sure, sir. My last question is at this point of time till the Gazprom cargoes don't normalize, we should expect petrochemical utilization to remain low because that is one area where you'll be cutting down consumption?
Yes. As of date, yes, that's our plan that if Gazprom cargo does not come and we are not able to source alternatively or then certainly, we will continue to keep the Pata plant production at the current level or around that level.
We take the next question from the line of Sabri Hazarika from Emkay Global.
Congratulations on good numbers for Q1. So I have 2 questions. First relates to the Gazprom only. So you mentioned that it will mostly be on the transmission, marketing and pet chem volumes. So compared to Q1 run rate, what is the current rate? I mean what kind of a decline are we seeing, say, as of now, as of today?
In transmission volume, marketing volume and also in petrochemical you are asking, everything?
Yes, all 3 of them, yes.
So let me tell you, if we have supplied on an average basis, 100 -- transmitted 100 -- marketed 100 MMSCMD in Q1. So the state RLNG cut by 10%, 6 million cut we have already done. So out of 100, 5 million or 6 million, so almost 90 million to 95 million, we may be marketing, exact number difficult, but range can certainly be shared because we have cut down by 5 million or so.
And in terms of transmission, also similar cut will come. And apart from that, not only that cut will come and Pata petrochemical congested 2 million if we keep it continue at current level. So that will be at 7 million as compared to marketing because that transmission includes the internal consumption as...
Now, that's Pata, I didn't get it. You said that we -- I mean, how much of Gazprom was being supplied in Pata earlier?
No, no, we are not very specific to any particular supply to Pata. We have always been maintaining that we are a portfolio holder. We used to supply Pata out of our portfolio, Gazprom was part of our portfolio. Gazprom is not coming. So therefore, there are issues in overall portfolio, but that's how we have stopped or reduced the supplies to Pata because overall availability is less. But there is -- there was no specific location per se to Pata.
Right. And sir, second question is on your petrochemical actually, the realizations versus the South Korean benchmarks have expanded significantly in Q1. So is this some specific grade you are selling or something of that sort? Or is it like normal line of business.
Just hold on because this is very, very specific questions.
I didn't get your question, sir. Can you -- will you repeat it, please?
I mean if I compare the petrochemical realization, which is the revenue divided by sales volume. So that number we compare with the South Korea benchmark. I think it comes from Bloomberg. So their potential used to be 15%, it has gone up to more than 30% now. So I mean your products are being sold at a premium versus the Korean benchmark. So any reason behind that?
Thing is that during June and this thing, there were domestic plant shutdowns were there. And the domestic prices were not in line with the industrial plants report. So we -- the domestic charge a reasonable price. And today, now slowly this marketing is correcting and now is taking the adjustments.
Okay. The domestic prices were at a premium during Q1?
Yes, during that period, yes.
We take the next question from the line of Krati Sankhlecha, Credit Suisse.
Sir, 2 questions. One, PNGRB has not fixed any tariff for Phase 2 of Urja-Ganga. So right now, whatever volume that's flowing through Phase 2, what the tariff is being charged by them?
So yes, you are right. What has happened in sometime in 2019, PNGRB fixed the tariff of Urja-Ganga for considering the CapEx of around INR 1,600 crores and capacity of 7.44 MMSCMD. So it was based on that, and that is the tariff available to us for charging with the customer. So we are continuing to charge the tariff as approved by PNGRB. Then we have -- in terms of contract, we have a clause that once the tariff is revised by PNGRB, we'll charge a revised tariff.
That means in order to you explain in further detail that this pipeline has a CapEx of almost INR 15,000 crores, if we reduce the capital grant of INR 5,000 crores, almost INR 10,000 crores I'm talking on broad basis. So that pipeline tariff has to be worked out considering the differential CapEx of almost INR 8,000 crores in capacity addition of from 7 to 16, that is almost 9. If you -- I'm talking of total capacity not -- so the tariff is significantly going to go up because on NPU basis, it has a further impact. So tariff will be around 140 or 150 subject to review and approval by PNGRB. So those tariff once approved by PNGRB will available -- until then, we are charging these tariff for Phase 1.
Okay. And sir, in the transmission segment, the profitability was very big this time. The volume was higher. The realization is also higher -- the absolute EBITDA was lower QoQ, it seems to be higher OpEx, I did not understand why higher OpEx...
It's not due to higher OpEx, let me tell you, you must know that -- the GTC we use for running the compressors, gas turbine generator. It has an allocation of APM gas. APM gas used to be at a price of $2.90 per MMBtu, which has gone up to $6.1 per MMBtu. So we are booking the cost at a higher level. And the same is available through tariff I just explained when it is announced. I feel then that is announced. So our OpEx certainly will be higher. And therefore, even though revenue increases, the margins will be lower.
Okay. And sir, just last one question on the LPG volumes. The LPG volumes have been consistently weak upon many quarters now. Till FY '21, the FY '20, actually, we will be used to be 300,000 million tonnes per quarter. Now we are hardly 200,000, 250,000. What has changed here?
Yes. There is nothing changed except the availability of gas from ONGC, if we get the gas.
Okay. So can you help me with what gas was allocated in 1Q, the APM gas?
1.75 MMSCMD.
We take the next question from the line of Sujit Lodha, Birla Sun Life Insurance.
First question would be regarding going back to the Gazprom volume. So what are the terms with both Gazprom and your customers in case if they tell to deliver the promised holders, how will they make up for that? Is it over the course of time, they have to make up for the same volumes? And similarly, how do you make up if you fall short of supplying the volumes to your customers?
Actually, your voice is not coming that clearly. I'm sorry, you have to repeat once again.
Am I audible now?
You are audible, but it was not coming so clearly. Yes.
Should I repeat my question?
Please.
Yes. Sir, so basically on the Gazprom contract, what are the conditions with Gazprom if they fail to deliver. So how do they make up for it? Is it on the balance tenure of the contract that they have to make up for the volume? And also vice versa, how do you make up in case if you tomorrow fall short of supplying your volumes, the minimum take-or-pay volumes also to the customers, how would you make up for that? And what are the terms on...
So with respect to Gazprom contract, so it is not actually right at the moment for me to give a very nitty-gritty of the contract. So they are -- I will tell you on our basis, if they don't supply there are penalty provision. So we'll pick up that and how we will take up that, how they will supply and what are the major, those are matters of taking up a negotiation so it's not right on my part to move into the details of those provisions. With respect to customers, so let me tell you, it's not in most of the cases of back-to-back contracts with Gazprom. We have a portfolio of contracts. So it's not that when Gazprom is not supplying or supply. So we have made portfolio contracts and still that we are not going below the contractual provisions which we are supposed to supply. So therefore, there is no question as long that arising that we have to make up for gas.
No, no, that I understood that you have a contract based on portfolio and they don't care whether it's coming from Gazprom or any other source. But -- so basically, at the price you will be able to supply, that's what you're saying, the minimum contracted volumes will be a...
Yes, yes. it's more than minimum contracted volume we are supplying as I explained to other...
That would continue in future also, irrespective of where the Gazprom supply goes?
Yes. Yes. We hope to do so because there are not many major -- because this situation has happened all of sudden. So certainly, when we get -- we are getting now time to overcome those situations, and we are working on that.
Okay. Sir, while obviously, you cannot divulge details on the customer side, but sir, which would be the biggest sector which we'll be consuming this gas?
Sorry, bigger sector...
Which will be the consumer for this gas?
Again, there is no specifics. That's what I told you, because any biggest customer, one of the biggest customer is fertilizers.
We take the next question from the line of S. Ramesh from Nirmal Bang Securities.
If I just add a couple of thoughts. One is on the full gas purchase for the CGD sector, if you can tell us what is the volume you would have purchased on behalf of the CGD companies? And what is the kind of margin you would have earned? And is it included in your gas marketing segment in terms of the volumes and margins? And what is the kind of volumes you would have purchased on behalf of CGD companies? And would the margins on that be comparable to your average margins in gas marketing?
So last question first. Our marketing margin, which we normally add is the margin we charge, okay? There is no any significant delta or anything, we get a standard marketing margin, which we charge. And with respect to what kind of volume we are purchasing for supplying to CGD, it is around 10%, 12%.
10%, 12% of?
Total volume being consumed by CGD.
Total volume. So how much would -- what is the volume in MMSCMD which you have included in your marketing volumes, I may understand?
Sorry.
So what does that translate to in terms of the...
You can say it actually depends month-to-month because CGD demand is ever increasing to 2.5 to 3 MMSCMD.
2.5 to 3. And secondly, how much of that gas is procured from spot market because obviously, the APM gas allocation is falling short. So what proportion of that are you buying from the spot market?
So this is what we are buying through spot market. That's what I was telling to you, 12%, 13%, whatever ratio comes. 2.5 MMSCMD to 3 depending on the forecasted demand or last consumption based on the factor we arrived at. So that is the volume we are marketing as a spot or volume, which we are blending.
So the entire thing here on spot volume. Okay. So if you look at your segment EBITDA, which you've shared with us, LPG, it's very interesting to see that you have been able to maintain the LPG EBITDA at slightly less than fourth quarter and similar to last year, first quarter, in spite of the fact that your APM gas price has gone up from 2.9 to 6.1 so would like to know how you have been able to achieve this sort of EBITDA numbers for...
I explained in the opening remarks that the LPG prices are significantly higher as compared to Q4. There is around INR 12,000 per metric tonne higher as compared to Q4. So you are right that the input cost has increased, but it has been offsetted by the higher LPG prices.
So INR 12,000, sir, is not that big compared to the original price. I see because the gas prices have almost doubled even if you take the fourth quarter from 2.9 to 6.1 is doubled?
So, the impact of dollar increase is around INR 4,000. So almost it is offsetting. There may be some -- because if you consider INR 4,000, $3 it's INR 12,000.
Okay. Okay. So if I may ask you, how do we reach the trend for LPG and the higher profit margins for the rest of the year, assuming that the current APM gas prices are same, would you be able to maintain the same sort of EBITDA?
So it is difficult to predict future oil and gas prices. So I can only say, based on the current prices, what we are doing we'll be able to do, but there will be a likely increase in October of APM gas prices, to that extent whatever price increase, our margins will go down.
Okay. So if you were to take a slightly philosophical view on the gas sector, we are seeing very significant pain because of the high gas prices and a lot of the volumes are being sucked in by Europe. And if you look at the numbers being quoted by consultants, most of the LNG projects are all tied up with long-term contracts. So how are we approaching the process of negotiating for our future contract volumes because the LNG is due for renewal of their Qatar Gas contract. So what is your reading in terms of being able to line up future gas supplies from LNG projects -- long-term contracts on contract prices? And to what extent will we continue to be exposed to having an increase per share of our gas requirements coming from the spot market. You can share your thoughts, will be grateful.
So we have been sharing our thoughts in this regard. We were in the market for sourcing 0.75 MMTP of gas for coming 5 to 10 years. But unfortunately, because of the current situations, we did not get the response the way we were expecting. So again, we are now scouting the market for various indices, whether it's the United State Gas or the Middle East gas or any other source of gas. So currently, we are in the market for sourcing long-term gas not only to meet the current crisis, but also to meet the increasing demand of the country. So as of date, I can only share that we are in the market.
[Operator Instructions] We take the next question from the line of Kirtan Mehta from BOB Capital Markets.
Just to sort of take the CGD supply question for growth. What is your -- you mentioned that you are not able to secure the long-term volume or still under finding the long-term volume. But is there any plan to sort of supplement this volume with a short medium-term volume of 12 to 18 months, which might be available?
Let me tell you, we are in the market for all kind of periodicity, short, medium, long. But the market today is such that short-term volumes are not available at the desired price. That's the challenge we are facing. So though we are there in the market, but that's the challenge we have.
Right. And how do you see the prior LNG price sort of -- there could be a possibility that we might see the continued surge in LNG prices during the European winters. So what's the plan to protect CGD sector against that additional surge?
So plan is that we are scouting the market of what can be the other plans. So you can only source at a cheapest available price, and that's what we are doing. It's difficult to predict what will happen, but we are doing that.
Just one more question on the Kochi-Bangalore pipeline, is there any further update in terms of the finalization of the plant, Kochi-Bangalore pipeline?
So there is no further change in that. There is no further change in the status.
We take the next question from the line of Vipul Kumar Shah from Sumangal Investments.
So sir, what is your volume which is on the long term from Qatar and Gazprom. So what is the long term and what is the short term you're sourcing?
Can you come back? What is our long-term volume from Qatar, that was the question first you asked?
Qatar and Gazprom and every -- all long-term contracts included.
Yes. We have 14 MMTP of approximate LNG contract. We have almost 4.8 MMTP from Qatar, 5.8 MMTP from United States and then almost 0.42 from [indiscernible]. And then what else -- 2.5 from gas Gazprom. That's around 14.
So right now, only this 2.5 is the problematic area, right?
Right.
So similarly, on the sales side also, all your sales fixed price or what percentage is fixed price and what percentage is what?
I also don't know. So because we have all kind of contracts. We have the back-to-back contracts with marketing margin. We have the contract with the index at which we bought and we have different marketing margins, we sell on a fixed price, not for a longer but for a -- short contracts or a month or 15 days -- so we have all kinds of contracts. But fixed contract you are talking about is not quite a longer period, it's only for a smaller period of 15 days or 1 month or so.
We take the next question from the line of Vishnu Kumar from Spark Capital.
Sir, just to summarize out of your 100 MMSCMD that you're doing in natural gas marketing, about 9 MMSCMD ideally should come from the Gazprom contract, which is roughly 2.5 9 MMSCMD, of which 3 or 4 is roughly getting impacted, is that the right understanding?
What you said in last 3 or 4 what?
No, no. You have 2.5 million tonnes would be 9 MMSCMD roughly.
No, no. Let me tell 2.5 -- you are arriving at 9. But actually, out of almost 39 cargoes, 36 we are supposed to supply in terms of contract fee, they have right to supply or not to supply. So we consider that 8 to 8.5 MMSCMD of gas, which is supposed to...
Okay. On a monthly run rate or if you can just say what is the shortfall that you're seeing even on a percentage basis?
Yes. Yes. So in last quarter, we only -- we did not receive 8 cargoes, okay, since May.
So roughly almost 80% of the volume that you're supposed to get you will not get. Because if I take 38%...
Situation in last quarter, I cannot say what will happen in this quarter.
Understood, sir. Sir, second question is that normally you have some spot allocation out of your overall portfolio. Does this mean that you don't have any spot for the next couple of quarters, assuming the current situation holds, and you may have to source a little bit of spot gas and supply to a few customers, if required.
We certainly source for export also because the bidding comes in between whether you talk of fertilizer bidding or whether the spot customer requirement, there are customers who are also taking at this price to meet their requirement. So we are there in the market for spot for sourcing and supply side both.
Okay. Can it be said, sir, that out of this 100 MMSCMD earlier, 90%, 95% used to be -- you used to say that 80%, 85% to 90% used to be contracted, some 10 MMSCMD or 10% used to be on spot. Now you don't have any spot. That's the only question I'm asking.
Actually, I also said spot is there. If you talk of PMC contract, the fertilizer supplies, which happens quarterly bidding, that is spot. So spot is there, spot will remain there. It may reduce certainly because some of the volumes may not come off or top-up volumes may not come up at this price, but spot is there significantly.
Understood. Sir, in the past, you mentioned that some of the U.S. contracts in 2020, we have logged in on time swaps, and they will likely roll off in a year's time frame. So next year, I mean, I'm just hypothetically asking that the U.S. contracts which you have kind of entered into in terms of contracts, they will be available to you next year onwards, which will ease your some of the issues that you currently have?
So numbers is not there. Certainly, they are available, numbers we can give you offline. But yes, that's there.
Got it. And sir, if you could just give your internal consumption segment wise gas transmission on a normative basis, pet chem, LPG, if you could just give the internal consumption of gas, segment wise?
So I think it's not -- right now, I'm not able to share you...
Okay. And on your Urja-Ganga...
May we request you to come back to the question queue. There are participants waiting for the turns.
We take the next question from the line of Varatharajan from Antique Limited.
A couple of questions. One, LPG allocation, you mentioned 1.75 MMSCMD that is the allocation or the actual supplier always meets the allocation? Or does it fall short?
Yes, it's there. Right now, it's there.
Right now it is meeting. Secondly, this CGD in terms of the pool pricing, if you can just give us some insight into how the mechanism works. For example, like last time it was 895, it is 1,052 this time around. So when you budget for the increased demand and you place an order in the spot market for the LNG? On a delivered basis, what do you count that? And that is how that this number shifts from month to month? Or like how does it work?
This number changes in month-to-month and the price is based on the availability of domestic gas and the actual consumption and based -- base price is calculated with the mix of domestic gas and the other spot source gas.
So the requirement is taken on a quarterly basis or on a monthly basis?
So as per the recent guidelines of -- the consumption numbers are taken on a quarterly basis and every entity is allowed to consume up to 102.5% of UBP gas. And if the consumption is higher than that, they will top up it with their own sourced LNG or whatever, and that will come up in the next consumption, whenever the consumption figures are revised after a quarter, that will be taken as the consumption.
So if I may -- if my understanding is correct. So the requirement is like in the last quarter was consumption was 100. This 2.5 extra is something which you anyway place an order for or do you vary the volume month-to-month based on what you see as the actual [indiscernible] by the customers.
As I said, the consumption numbers have to be revised after the end of quarter. So monthly, the consumption numbers are not revised monthly.
We take the next question from the line of Yogesh Patil from Centrum.
So both of my questions are related to current higher LNG prices scenario. So in the first case, can you please update on the upcoming fertilizer plan? And do you see any delay in commissioning of fertilizer plants due to the shortfall of LNG?
Now 2 fertilizer plants HURL Gorakhpur is already commissioned. Now Sindri and Barauni both are under pre-commissioning phase, and they have their plans to light up the reformers. And I think the commissioning is due sometime end of August or September. They have few technical glitches, which they will be sorting out during the next 1 or 2 months.
Okay. So you don't see any kind of a delay in commissioning of fertilizer plants due to the higher LNG prices or shortfall of LNG on the long-term contract...
No.
Okay. So sir, second question is again related to the rising gas prices or LNG prices. Do you see any deferment or postponement of the commissioning of new geographical area for the CGD sector?
Difficult for us to say because [indiscernible] entity will take a call commercial call. As far as gas based on UPP, which is available to all these CGDs will be available to them. But now they will see their commercial viability and they will see alternative fuel price based on the price when they will commission or what -- how or when they will supply.
We take the next question from the line of Vikash Jain from CLSA.
So just wanted to understand this Gazprom situation on a Q-o-Q basis. So if last quarter, any way your volumes were much lower, then why -- I mean I understand that part of that demand was anyways offset because of your petrochemical plant functioning at a lower level. But if I were to look at that and you maintain the petchem plant at lower utilization, and why would the situation change dramatically this quarter versus 1Q?
We also not said. So Vikash, we have also said that one of the -- with reference to one of the question that whether you will be able to maintain same marketing spread I said, difficult or may not be possible. Then question one whether you will be able to maintain INR 1,100 crores as you maintained last time, I also said it's really in difficult situations, difficult to say with certainty. So there is a challenge in this quarter.
No. So what I mean is that last quarter, that is 1Q, you did not have Gazprom in any case, okay? So what -- I mean, only one cargo was there, right?
No, no, no. Last quarter, we had full supply until...
1Q. I mean, 1Q, you had full supply?
That's what I was trying to explain. In last quarter until May end, we had normal supply. Then for June -- till June month, we got only 1 cargo and in between, there were interruptions. So you can say -- and that last quarter was not that greatly impacted. But in this quarter, there is no certainty as far as whatever communications we have, though we are taking at all levels, including the government to government level including we are talking to Gazprom. But as of now, when I'm talking to you, there is no certainty about the availability of Gazprom volume. If it comes, certainly, of what will be available if [indiscernible] if it comes, certainly we will be better off as we were there in Q1, but it's still difficult to say as of now.
So that was my misunderstanding. So just to understand that, so broadly, you said that your volumes would be down by roughly, what, 6, 7 MMSCMD both on the transmission side as well as in the marketing side. That is the impact of Gazprom?
Yes. Yes. So currently, we have already reduced almost 5 million, 6 million per day of volume from supply side. If transmission you consider 7 or 7.5 because internal consumption is part of transmission, not the marketing volume.
Okay. So basically, whatever is the 1Q average, our current transmission volumes are about 6, 7 MMSCMD lower than that. And petchem at what level of utilization are you kind of running to manage this situation?
Currently, we are running around 50%.
Around 50%. So basically, the hit is 3-way volume of both marketing and gas transmission about 6, 7 MMSCMD and petchem being run at 50% utilization?
Yes or maybe little less than 50%.
Okay. And with -- if -- since there is this stock of Europe reducing energy imports from Russia by just from -- I think, just from December. So if that really plays out, would that free up more gas to be available to us? Or that's something that is not the way to look at...
No, free of which gas, mostly, they are dependent on pipe gas. The pipe -- free up of pipe gas will not make LNG available.
Okay. So this is simply because of production issues? Or since you said that your contract with the German subsidiary of Gazprom? So what exactly is causing this? Is this a production issue?
So basically, its a portfolio supply, and they are telling that we are not able to supply you because in order to meet the Europe -- because there are some [indiscernible] regulator is there in German. They have said that in order to meet the European requirement, we are not able to supply you from portfolio, but they have not said till until they will not supply -- how much they will not supply that is the current situation.
So that's why I asked that because of that if Europe reduces imports. So essentially, even that supply, which is being kept by the German regulator would also get freed up or no? This is only...
Very difficult, Vikash, very difficult to say what will happen, how it will happen, very difficult terms. So uncertainty is there.
So in the current scenario, automatically versus the 1Q base, we are 6, 7 MMSCMD down. So basically, how do we see volumes rising from here? Did these fertilizer plants coming in will allow us to get more U.S. LNG into India, and that is how volumes are rising? In a scenario, till Gazprom is not addressed?
So we are taking a lot of actions. One is that in order to make new plants -- availability of gas for new plants, we already have the supply lined up from U.S. that we have already accounted for plants, which are likely to be commissioned. We have kept that in mind. Gas is available from United States. We had unallocated cargoes for that, we have already made arrangement for ship chartering. So we'll be able to bring the volume to -- in order to supply that gas to those fertilizer plants. For that, we are already -- there is no concern about that. And further in order to meet the -- further deficit, I was explaining to other participants that we are taking 2, 3, 4 actions. One of the actions which we have been taking for the last 1 year that we are in the market for contracting the gas on a long-term basis. We had invited tender for 0.75 MMTPA but there was no good response because of current situation. So we are also discussing with some of other players for sourcing of gas.
We are also there in the market United States. So volumes are available, but only challenge that we are getting volume in '23 than '24. Thereafter, the volumes are available, but there are certain suppliers, which are capable of supplying some of the volume in '23, '24. So we are working on that. And hopefully, let us hope for best, we are working on that.
So just one bookkeeping question. Any reason for corporate expenses to be so much lower? And number two, can you tell me what proportion of your U.S. volumes are not sold out? I mean, are not contracted for selling outside India in '23 versus '22?
So I have to check that. '23, not...
What proportion have you kept for India in '23? And what proportion did you keep for India in '22?
Actually, I think -- Vikash, readily it's not available.
Okay. And on the corporate expenses thing, sir?
Any reason why expenses are lower corporate expenses the way you report as a segmental one.
Yes. Actually, corporate expenses has not gone down. If you have gone through our Q4 accounts, we provided a provision for ECL, financial guarantees we have given to our U.S. subsidiaries. So that was around INR 170 crores. And second, only that CSR was in December. In Q4, that was the one major INR 170 crores.
Okay. So basically, nothing one-off here, but the sequential quarter had -- was bloated because of that, that's what you mean?
Yes. [Foreign Language] That's what I explained. So this -- actually, in Q4, it was INR 170 crores provision, which is not there in Q1 '23. So that is -- that one-off was in Q4 last year, not this year.
Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Yes. Thank you very much. Hopefully, we responded most of the questions. But yes, some of the questions we might have not responded. So participants are free to call us off-line, and we will be able to respond to the questions which we could not respond and which for questions which they have and they could not ask. Thank you very much for taking interest in us. That's all.
Thank you very much, sir, for your time. Thank you to all the participants. You can log-off now. Thank you very much.
Thank you, everyone. On behalf of ICICI Securities, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.