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GAIL inks deal with US firm for LNG liquefaction terminal

According to reports, state-owned gas utility GAIL (India) has booked capacity in the Cove Point LNG liquefaction terminal project at Lusby, Maryland, US. This move would make gas imports from the US to India a reality.

In a statement issued here, the company said it had signed a terminal service agreement with Dominion Resources Inc for booking 2.3 million tonnes a year liquefaction capacity in the terminal project.

Under this agreement, GAIL will procure its own natural gas and deliver it to the Cove Point pipeline for liquefaction at the terminal and loading into ships brought to the facility on the Chesapeake Bay. A GAIL official said at present there was no financial transaction for booking the capacity. GAIL has struck the agreement through GAIL Global (USA) LNG LLC. Dominion, which is a Fortune 500 company, is one of the largest producers and transporters of energy in the US with a portfolio of approximately 27,500 megawatts of generation and 17,600 km of natural gas transmission.

Dominion is marketing 4.6 mt a year and GAIL has booked 50 per cent of such capacity for 20 years. A major Japanese buyer holds the balance capacity in the terminal.

During an interactive video session following the signing of the document, B.C. Tripathi, Chairman and Managing Director, GAIL, said: “GAIL has a positive outlook on Henry Hub indexed LNG exports from the US and that has prompted us to sign this terminal service agreement which follows our deal with Cheniere signed in 2011. The contracts signed with Cheniere and Dominion make GAIL one of the largest Henry Hub LNG portfolio holders and provide us an opportunity to market about 6.0 mt a year of LNG from the US.”

Thomas F. Farrell II, Chairman, President and CEO of Dominion, said: “Japan and India are important allies and trading partners of the United States that are in need of secure sources of natural gas, and Sumitomo and GAIL are high quality companies working to meet those needs. We believe the agreements we have signed serve very important economic goals for all three nations.”

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