Deepak Fertilisers shares in focus on signing of LNG agreement with Equinor

Shares of Deepak Fertilisers and Petrochemicals Corporation Ltd (Deepak Fertilisers) will be in focus on Tuesday morning after the industrial chemicals and fertilisers producer and a Norway based international energy company, Equinor, entered into a long-term supply agreement for Liquefied Natural Gas (LNG).

"With this tie-up, Deepak Fertilisers strengthens its value chain with an attractive long-term LNG contract to solidify its value chain from Gas to Ammonia to various downstream Fertilisers, Industrial Chemicals and Mining Chemicals. This end-to-end tie-up shall establish a strong long-term foundation for all of DFPCL's product segments," the company said in a BSE filing.

Deepak Fertilisers shares are down 27 per cent year-to-date, as its Q3 consolidated profit fell 76 per cent YoY to Rs 61 crore on 33 per cent drop in sales at Rs 1,853 crore. Finance cost doubled for the quarter  

The agreement signed by Irene Rummelhoff, Executive Vice President, Equinor and Sailesh C. Mehta, Chairman & Managing Director, Deepak Fertilisers, is one of the largest contracts signed by Equinor with a private sector company in India.

"This agreement is for annual supplies of up to 0.65 million tonnes over a period of 15 years, beginning 2026. The tie-up provides room for trading some LNG parcels in the growing LNG demands in India as well as accommodating DFPCL’s growing captive needs. The LNG will be delivered to the west coast of India. DFPCL is at an advanced stage of tying up the Regasification Terminal with the Gas pipeline grid connectivity to its plant's doorstep already in place," it said.

The LNG agreement, Deepak Fertilisers said, encourages the companies to further collaborate on petrochemicals feedstocks and strategic decarbonization pathways in the future.

“We are very happy to enter into this long-term agreement with Equinor for supply of LNG. This will put on a solid footing Deepak Fertilisers value-chain right from Gas to Ammonia to building block Nitric Acids to downstream Fertilisers, Mining Chemicals and Industrial Chemicals, helping it to absorb Global volatility as well as enhance overall margins. We also look forward to exploring with Equinor, strategic tie-ups in our Chemical Business, as well as carbon footprint reduction initiatives.” said Managing Director Sailesh C Mehta.

“Deepak’s new ammonia plant will provide new, domestic fertiliser supply to India and we are proud to provide its feedstock in the form of natural gas. We look forward to further developing our relationship with Deepak on feedstocks and low carbon initiatives in the future”, says Equinor’s Senior vice president for Gas & Power

Helge Haugane.

 

 

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