You are here: Home » Companies » News
Business Standard

US should ease rules for LNG exports, says GAIL

Gas-surplus US at present allows exports of small amounts of natural gas

Press Trust of India  |  New Delhi 

Close on the heels of sewing nation's first gas import deal from the US, state gas utility GAIL India today said Washington should relax rules so that it can buy more liquid gas (LNG) to meet India's growing energy needs.

"If US becomes a major exporter (of gas), the market is in countries that have not signed free-trade agreements (FTAs) with the US such as India," GAIL Chairman and Managing Director BC Tripathi told reporters here.

Gas-surplus US at present allows exports of small amounts of natural gas. It has so far allowed only Cheniere Energy to export liquefied natural gas (LNG) from Sabine Pass LNG terminal to countries that have not signed FTAs with the US such as India.

GAIL recently signed an agreement to import 3.5 million tonnes of LNG from Sabine Pass, a subsidiary of Cheniere Energy.

"We are keen to import more as our demand-supply gap is growing," he said.

The company wants to tap all of the seven LNG export terminals planned in the US. The seven planned LNG terminals have approvals to sell gas only to nations that have signed FTAs with the US.

Tripathi hoped that the US will allow more exports to non-FTA signing countries and said GAIL has asked Ministry of External Affairs to push its case with Washington.

The present restriction was coming in way of GAIL's efforts to finalise liquid shale gas export from the US to India.

Tripathi said GAIL had in September 2011 acquired 20 per cent stake in Eagle Shale Assets in Texas of Carrizo Oil and Gas, which led to sewing up the LNG supply deal with Sbaine Pass at a price linked to US Henry Hub gas price as against the practice of tying it up with oil.

As on date, only Sabine Pass has received approval for export to both FTA/non-FTA countries whereas seven export terminals have received only FTA approvals.

Development of shale gas -- natural gas formed from being trapped within shale formations -- in the US has turned the gas market there from shortage to glut.

The US Energy Information Administration estimates that China holds the world's largest shale gas reserves, with 1,275 trillion cubic feet, followed by the United States at 862 trillion cubic feet.

Under a deal Cheniere Energy signed last year, GAIL will import 3.5 million tonnes of liquid gas per year starting in 2017.

Other US players, including the San Diego-based utility Sempra Energy and Dominion Resources Inc, are also pressing for permits to ship gas across the Pacific.

First Published: Mon, July 30 2012. 20:08 IST