Petronet LNG Shares Gain 4% After 15-Year Ethane Deal With ONGC; Nomura Sees 34% Upside

Petronet LNG’s stock saw a sharp upmove on December 4, rising more than 4 percent after the company announced a major long-term agreement with Oil and Natural Gas Corporation (ONGC). The fresh development not only ended a five-session losing streak for the stock but also improved market sentiment around the company’s future revenue visibility. The stock was trading at Rs 279.80 apiece on Thursday morning, supported by strong investor interest following the announcement.

Petronet LNG, ONGC Sign 15-Year Ethane Facilities Deal

In an exchange filing released post-market on December 3, Petronet LNG revealed that it has entered into a 15-year binding term sheet with ONGC for ethane unloading, storage and handling (USH) services.

The deal is scheduled to begin between October–December 2028.

According to Petronet LNG, the agreement is aimed at providing ONGC with dedicated access to its upcoming ethane infrastructure at Dahej, Gujarat, where the company is developing a full-scale import, storage, and handling system.

What Petronet LNG Is Building at Dahej?

Petronet LNG (PLL) highlighted that it is currently developing:

• An ethane unloading, storage and handling (USH) facility

• An ethane storage tank with an approximate capacity of 1,70,000 cubic metres

• A unique third jetty at the Dahej terminal

The third jetty is designed to be capable of handling ethane, propane, and LNG, making it the first-of-its-kind in India. The facility will also be available for third-party imports, expanding PLL’s customer base beyond LNG users.

The agreement positions PLL to expand its service offerings beyond traditional LNG regasification and strengthen its hold in India’s evolving petrochemical and energy value chain.

Key Terms of the Agreement

As per the binding term sheet:

• ONGC will reserve approximately 600 KTPA capacity at PLL’s ethane storage and handling facility.

• Petronet LNG will receive, store, and handle ethane sourced and imported by ONGC or its subsidiaries/affiliates.

• Ethane will be redelivered to ONGC at the designated delivery point after the handling process.

The facility operations and revenue generation will commence from FY 2028–2029.

Petronet LNG estimates earnings of around Rs 5,000 crore in gross revenue over the 15-year contract duration, reinforcing the long-term financial visibility that investors typically value in such large-scale contracts.

The company described the deal as a milestone in its strategy to offer ethane import infrastructure to third parties, helping expand its business portfolio beyond LNG.

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Importance for ONGC and OPaL

Petronet LNG said the agreement ensures assured capacity booking for ONGC, enabling the company to import ethane to meet the feedstock requirements of ONGC Petro Additions Limited (OPaL).

OPaL operates one of India’s largest petrochemical complexes located at Dahej, Gujarat, which includes a world-scale ethylene cracker that uses ethane as the primary feedstock. Securing long-term ethane import capability is critical to its operations, and this agreement supports that requirement.

The signing event took place at ONGC’s corporate office in New Delhi, in the presence of ONGC Chairman & MD Arun Kumar Singh and Petronet LNG MD & CEO Akshay Kumar Singh.

Nomura Terms the Announcement Positive; Sees 34% Upside Potential

International brokerage Nomura maintained its ‘Buy’ rating on Petronet LNG following the announcement. The firm set a target price of Rs 360 per share, indicating an upside potential of nearly 34 percent from the stock’s previous closing price.

Nomura described the development as a positive trigger for the stock and expects the remaining 50 percent capacity of the facility to also get booked before the ethane infrastructure becomes operational.

The brokerage also shared its EBITDA projections based solely on the provided information:

• First-year EBITDA: Rs 140 crore

• 15th-year EBITDA: Rs 275 crore (without assuming any margin improvement)

These estimates further reinforce confidence in the deal’s long-term earnings contribution.

Petronet LNG Share Price Performance

Based on recent trade performance:

• The stock has gained more than 2.5 percent in the past five days.

• It has fallen by over 9 percent in the past six months.

• Petronet LNG is down around 20 percent from its previous closing price.

• The stock has fallen over 17 percent in the past one year.

• Over the last five years, it has gained only 6.5 percent.

The sharp jump on December 4 marks a notable recovery after consecutive sessions of weakness, supported by the long-term visibility provided by the ONGC contract.

Market Reaction and Outlook

The market’s initial reaction to the Petronet–ONGC announcement has been positive, as reflected in the stock’s 4-per cent surge. The long-term nature of the contract, potential for additional capacity booking, and revenue clarity over 15 years have improved sentiment.

However, investors were also reminded through the disclaimer that any investment decisions should be made in consultation with certified financial experts.

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