Petronet LNG, GAIL in focus as QatarEnergy production halt sends natural gas futures soaring 32%

Shares of GAIL, Petronet LNG, Gujarat State Petronet Limited (GSPL) and Gujarat Gas Limited (GGL) will be in focus on Wednesday after Qatar Energy halted LNG production after Iran attacks, leading to surge in LNG prices in Europe. In a media release, Qatar Energy said following military attacks on its operating facilities in Ras Laffan Industrial City and Mesaieed Industrial City in the State of Qatar, it has ceased production of liquefied natural gas (LNG) and associated products.  

"QatarEnergy values its relationships with all of its stakeholders and will continue to communicate the latest available information," it said.

Following the development, Dutch TTF Natural Gas futures, which surged 39.26 per cent on Monday, extended recent surge and were quoting at 54.645 euros on Tuesday, up 22.78 per cent. They were up 32 per cent intraday.

A report by Reuters citing four industry sources suggested that Indian oil companies have reduced natural gas supplies ​to industries in anticipation of tighter supply from the Middle ‌East after top producer Qatar halted production. The cuts range from 10 per cent to 30 per cent, two of the sources said.

As per a January note by Nomura, Petronet LNG has an existing LNG contract of 7.5 mpta with Qatar Energy. GAIL has an existing contract of 1mpta with the LNG supplier. GSPC, which is a parent of GSPL and Gujarat Gas  has also an existing contract of 1 mmtpa with Qatar Energy. 

Besides, oil & gas stocks would also be in focus tomorrow as the Strait of Hormuz, the narrow chokepoint through which 20 per cent of global oil supply & a similar share of LNG trade transit, has seen shipping come to an halt. 

"A total of 50 per cent or more of India’s energy imports transit through the Strait of Hormuz. As a result, even partial or temporary disruptions could have an impact on India’s energy security, inflation trajectory and external balances," Axis MF said in a note.

The MF house said the ongoing conflict is a serious geopolitical event, but for Indian investors, it is not
unprecedented. 

"Over the past 15 years, every major conflict has tested sentiment and almost every time, Indian equities have proven resilient. Markets may fall, currencies may weaken and oil may spike. But fundamentals reassert themselves over a period of time," it said.