Gail signs deal with Dominion for U.S. natural gas

NEW YORK (Reuters) - Dominion Energy has signed two deals with Indian and Japanese buyers to export liquefied natural gas from its proposed Cove Point export plant in Maryland, the latest pact that could see U.S. shale gas consumed worldwide.

India's state-owned Gail and Japan trading firm Sumitomo have signed up to use Dominion's $3.5 billion LNG plant that will liquefy U.S. gas for shipment in tankers overseas by 2017, pending government approvals, the companies said on Monday.

Dominion filed for a construction permit from the Federal Energy Regulatory Commission on Monday, and is still waiting for approval from the Department of Energy to export gas to countries which do not have free trade agreements with the United States, including Japan and India.

DoE approval will depend largely on the outcome of a contentious debate currently raging in the United States about whether exporting its abundant resources of gas might hurt consumers by pushing prices higher at home.

So far, the DOE has approved one export plant - Cheniere Energy's Sabine Pass project in Louisiana - and said it will consider each project separately in the order in which it received applications. Dominion's Cove Point is third in line.

Under the agreements, Gail and Sumitomo will source the gas themselves and pay to use the plant, which will have the capacity to produce 5.25 million tonnes per year (mtpa) of LNG. Both companies will be able to export 2.3 million tonnes per year.

Sumitomo will sell the LNG onto Japanese utilities Tokyo Gas and Kansai Electric Power.

IHI/Kiewit Cove Point, a joint venture between IHI E&C International Corporation and Kiewit Corporation has been awarded the engineering, procurement and construction (EPC) contract for the plant, Dominion said.

(Reporting By Edward McAllister; editing by Andrew Hay)