GAIL arm to source natural gas for liquefaction at Cove Point, US

India’s state-owned natural gas utility GAIL (India) Ltd announced on Friday that its subsidiary, GAIL Global USA LNG, had signed an agreement with US-based WGL Midstream Inc for sourcing gas required to produce 2.5 million tonnes of liquefied natural gas (LNG) a year at the Cove Point Terminal in Maryland, US.

WGL Midstream is a subsidiary of WGL Holdings, a large natural gas company in the US. GAIL will import the gas under the pact to meet India’s rising demand for natural gas. The definitive gas sale and purchase agreement was signed for 20 years. Supplies are expected to commence from 2017 when the LNG terminal, in which GAIL Global USA LNG holds liquefaction capacity, becomes operational.

GAIL termed the agreement a ‘milestone’ in its efforts to source gas for India from abroad. “We are delighted to partner WGL Midstream which is a part of a group having a rich history of over 160 years in natural gas supply business in the mid-Atlantic region. We are now in the process of chartering of LNG ships thereby entrenching our presence across the complete LNG supply chain,” said GAIL chairman B C Tripathi.

WGL Holdings’ Chief Executive Officer Terry D McCallister said there was a growing supply of natural gas from the Marcellus shale production region. “This source has been providing clean natural gas to Northeast and Mid-Atlantic regions of the US and now will supply the country of India as well,” he said.

GAIL was assisted in the commercial and legal aspects of the transaction by Pace Global, Thompson & Knight and law firm Amarchand Mangaldas. WGL Midstream engaged Vega Energy Partners for the execution of these transactions. Vega will also play a role in the implementation of these contracts.

GAIL had earlier signed a 20-year sales and purchase agreement with Sabine Pass Liquefaction, a unit of Cheniere Energy Partners for supply of 3.5 million tonnes per annum (mtpa) of LNG. GAIL already has a terminal service agreement for 2.3 mtpa of LNG liquefaction capacity with Dominion Cove Point LNG. The shipments are expected to start by 2018.

WGL Midstream handles non-regulated gas business with operations covering midstream infrastructure and energy services. Its parent, WGL Holdings Inc, is a public utility holding company serving the Washington DC metropolitan region. It also supplies clean energy solutions in 30 states. It serves about a million customers in Columbia, Maryland and Virginia.

EXPLORING NEW SHORES

• US-based WGL Midstream Inc to supply natural gas to produce 2.5 mtpa LNG
   
• GAIL will import the gas under the pact to meet India’s rising demand for natural gas
   
• Supplies are expected to commence from 2017 when the LNG terminal, in which GAIL Global USA LNG holds liquefaction capacity, becomes operational
  

 

GAIL had earlier signed a 20-year sales and purchase agreement with Sabine Pass Liquefaction, a unit of Cheniere Energy Partners