Standard Post with Image

GAIL Inks Deal to Buy U.S. LNG

  • The United States could soon help relieve India's growing natural gas shortfall by supplying the major energy consumer with liquefied natural gas.Huge increases in U.S. natural gas production in recent years thanks to shale development has led to a supply surplus and a string of export plans, while India's domestic supply has fallen, leaving it scrambling for imports from overseas.Cheniere Energy (LNG.A) will supply state-run energy company GAIL India Ltd with 3.5 million tonnes per year (mtpa) of LNG for 20 years from its proposed Sabine Pass plant in Louisiana, starting in 2017, the companies said in a statement.
  • "The SPA with Cheniere will help GAIL to ensure long term gas supply for the growing demand in the Indian market," GAIL Chairman B.C. Tripathi said.India plans to increase its import capacity four fold by the end of the decade to make up for declining production in domestic fields, potentially adding eight import terminals to the two already operating.The country, which gets most of its energy from coal, already has supply deals in place with Qatar, Russia and Australia, while also purchasing some spot cargoes from producers in the Atlantic including Trinidad and Nigeria.
  • In September, GAIL bought a twenty percent interest in Carrizo's Eagle Ford Shale acreage, its first U.S. shale purchase which it plans to complement with further acquisition s , Tripathi said.Before the long term deal begins in 2017, Cheniere will supply GAIL with 0.2 mtpa in 2016, pending regulatory approval for the export project.The supply agreement, which follows similar deals with BG Group (BG.L) and Gas Natural Fenosa (GAS.MC), fills capacity for the fourth production unit, or train, at Sabine, and leaves only train three's capacity to be sold."We continue to hold advanced discussions with additional global LNG buyers and expect to complete commercial discussions for the remaining capacity of the second phase of the project, train three, in the coming weeks," Cheniere Chief Executive Charif Souki said.
  • The United States is making moves to export natural gas as domestic production swamps the market and pushes prices way below global levels.Sabine Pass is the most advanced of eight planned North American projects that would cool gas to a liquid for shipment to thirsty markets across the globe.Exports from the first train at Sabine are expected to begin in 2015. Pending approval from the Federal Energy Regulatory Commission, construction is expected to start next year.

Source