Decks cleared for export of US gas to non-FTA countries

Order to directly benefit India as GAIL recently booked 2.3 mmtpa capacity in the Cove Point LNG Terminal

Ahead of the Obama-Singh meeting later this month, the US has granted conditional authorisation to export domestically produced liquefied natural gas to countries that do not have Free Trade Agreement with America, from a terminal, where India's GAIL has a major stake.

In a long awaited order, the Department of Energy said it has conditionally authorised Dominion Cove Point LNG, LP to export domestically produced LNG to countries that do not have a Free Trade Agreement (FTA) with the US.

The latest order from the Department of Energy on Wednesday is expected to directly benefit India as the state-owned natural gas processing and distribution company Gas Authority of India Limited (GAIL) recently booked 2.3 mmtpa capacity in the Cove Point LNG Terminal, proposed to be commissioned by Dominion Cove Point LNG LP in 2017.

"I was pleased to note that the Department of Energy approved Dominion Cove Point for exporting LNG to non-FTA countries, and India stands to benefit from over half of the exports from that facility," Nisha Desai Biswal said.

Indian-American diplomat Biswal told members of the Senate Foreign Relations Committee yesterday during her confirmation hearing for the post of Assistant Secretary of State for South and Central Asia.

Maryland-based terminal Dominion Cove Point previously received approval to export LNG from this facility to FTA countries on October 7, 2011.

Subject to environmental review and final regulatory approval, the facility is conditionally authorised to export at a rate of up to 0.77 billion cubic feet of natural gas a day (Bcf/d) for a period of 20 years, the Department of Energy said.

The Gas Authority of India Limited (GAIL) has executed an LNG off-take agreement with Sabine Pass Liquefaction LLC, for import of 3.5 million metric tonne (mmtpa) per annum LNG from the USA on FoB basis.

The commencement of supply is expected to start from 2017-18.

Indian Ambassador to the US Nirupama Rao, in a recent talk said that demand supply gap of natural gas in India, which is estimated at around 2.2 trillion cubic feet (TCF) per annum presently, is likely to go up to nearly 4 TCF/annum by 2016-17.