GAIL inks agreement to buy 2.5 million tonnes of LNG from US

PSU major is in the process of chartering of LNG ships, had earlier sourced the fuel from Cheniere Energy

GAIL India Ltd, the nation's largest natural gas distributor, has signed an agreement with US-based WGL for buying about 2.5 million tonnes of gas for 20 years.

GAIL Global USA LNG LLC, a subsidiary of the state-owned firm, signed a sourcing agreement with US-based WGL Midstream Inc for "procurement of natural gas required to produce about 2.5 million tonnes a year of LNG at the Cove Point Terminal located in Maryland, US," a company statement said.

WGLM is a subsidiary of WGL Holdings Inc, a prominent natural gas company of the United States.

GAIL had previously signed deals to buy 3.5 million tonnes of LNG a year for two decades from Cheniere Energy Inc's Sabine Pass terminal in Louisiana. It had also booked 2.3 million tonnes a year capacity in the Cove Point LNG liquefaction terminal in Maryland. The shipments are expected to start by 2017-18.

"The definitive gas sale and purchase agreement has been signed for a period of 20 years and supplies are expected to commence from late 2017 when the LNG terminal, in which GGULL holds liquefaction capacity, becomes operational," it said.

GAIL Chairman and Managing Director B C Tripathi said the pact was part of the company's efforts to source liquefied natural gas (LNG) to meet the country's rising energy demand.

"We are now in the process of chartering of LNG ships thereby entrenching our presence across the complete LNG supply chain and bring more value to Indian customers," he said.

On the occasion, Terry D McCallister, Chairman, WGL Holdings said, "WGL Midstream's long-term relationship with GAIL capitalises on the growing supply of abundant natural gas from the Marcellus Shale production region.

"This growing supply source has been providing clean burning natural gas to Northeast and Mid-Atlantic regions of the United States and will now supply to India as well."

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.

Pace Global (a Siemens business), Thompson & Knight and Amarchand Mangaldas assisted GAIL on commercial and legal aspects of the transaction, the statement added.

WGL Midstream engaged Vega Energy Partners for the execution of these transactions. Vega will also play a role in the implementation of these contracts.