GAIL, Shipping Corporation join hands for LNG Shipping

State-owned gas utility GAIL India Ltd today signed an agreement with national flag carrier Shipping Corp of India (SCI) for transporting liquid gas (LNG) from US.

SCI will help GAIL charter ships to move 5.8 million tons a year of liquefied natural gas (LNG) that the state-run gas firm has contracted from Sabine Pass and Cove Point terminals in US.

The MoU was signed in the presence of GAIL Chairman and Managing Director B C Tripathi and SCI Chairman & Managing Director B K Mandal, a press statement issued by GAIL said.

"The cooperation would include SCI assisting GAIL in the charter hiring of LNG ships and GAIL assigning step-in right to SCI in the ownership of LNG ships," it said.

GAIL has signed a 20-year contract to buy 3.5 million tons a year of LNG from Cheniere Energy Partners' Sabine Pass Terminal in Louisiana, USA for a period of 20 years.

The company has also booked an additional 2.3 million tons capacity at Dominion's Cove Point LNG liquefaction terminal project located at Lusby in the state of Maryland.

"As the agreements are on FOB basis, GAIL is required to make its own arrangements for transportation of LNG from these terminals. The transportation of LNG is expected to begin from mid-2017," the statement said.

Tripathi said LNG has become important business vertical of GAIL and the experience of SCI in the shipping business will bring huge synergetic advantage for both the companies.

"We expect that this partnership will enable faster development of in-house fleet operations capabilities for the company," he said.

Mandal said with several LNG import projects being conceived in the country, LNG is seen as a key growth area for SCI. "SCI is planning to develop separate vertical within the company to manage LNG shipping."