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Motilal Oswal Report
The onset of Russia-Ukraine conflict brewed an unavoidable storm for Gujarat Gas Ltd. with spot liquefied natural gas price spiraling to $34.5/metric million British thermal unit in H1 FY23 from @23.4/mmBtu in FY22.
Brent also surged to $107/bbl in H1 FY23, thereby escalating costs for Gujarat Gas' long-term, crude-linked contracts. The storm intensified further as Morbi's ceramic cluster was shut down for a month in Q2 FY23, thus severely impacting industrial volumes.
As a result, piped natural gas price rose to Rs 63/standard cubic metre by May-22, before dipping to ~Rs 46/scm at present. Higher prices forced consumers, especially at Morbi, to switch to cheaper alternatives such as propane and LPG.
However, the storm now seems to be running out of steam with spot LNG prices declining 48% from its peak.
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