India, Japan to jointly buy LNG

GAIL India Ltd may this month sign an MoU with Japanese utility Chubu Electric Power Co to jointly procure LNG

India and Japan, two of the world's biggest buyers of liquefied natural gas, may this month sign an agreement to look at jointly procuring LNG so as to cut prices for the fuel.

 

GAIL India Ltd, the nation's biggest natural gas distributor, may this month sign a memorandum of understanding with Japanese utility Chubu Electric Power Co to jointly procure LNG.

 

"We are discussing with them (on the agreement) and shortly we will be able to sign a MoU," GAIL Chairman and Managing Director B C Tripathi told reporters here.

 

The agreement will be for cooperation in natural gas sector - from LNG sourcing to shipping and supply. "It will be for all-round cooperation," he said.

 

The two nations, who feel LNG sold to Asian countries is priced more than that supplied to consumers in Europe and the US, had in October 2012 agreed to carry out a joint study to examine ways to mitigate increasing import costs in Asia as well as to maintain stable supplies of LNG to the region.

 

In September last year, they agreed to work together towards the development of LNG markets that will enable effective, stable and globally competitive LNG procurement.

 

India, the seventh largest LNG buyer in the world, and Japan, the biggest importer of liquid gas, currently buy the gas separately. This brings to the market a hugely competing demand, pushing the prices up.

 

New Delhi has been pushing for LNG buyers forming a forum to better negotiate price with suppliers in the Middle East, Africa and Australia.

 

Chubu President Akihisa Mizuno last week said in Tokyo that the Japanese utility aims to sign an agreement with GAIL to launch talks on potential joint purchases of LNG and cooperation in areas such as shipping.

 

Asian prices are now more than four times the cost of natural gas in the United States.

 

Tripathi said GAIL has tied up 6 million tonne a year of LNG from the US beginning 2017-2018 and the company is planning to sell the entire volume to the domestic market.

 

GAIL is looking to trade 1 million tonne a year of the US LNG via its Singapore office.

 

It has signed a 20-year terminal service agreement with Richmond, Virginia-based Dominion to lift 2.3 million tonne of LNG from the Cove Point project.

 

GAIL also has a contract with Cheniere Energy to import 3.5 million tonne a year of LNG from the Sabine Pass terminal in Louisiana.