GAIL Signed deal with US firm for LNG liquefaction terminal

State-run GAIL (India) Ltd on 1 April 2013 signed a deal of 2.3-million-tonne (mt) capacity in the Cove Point LNG liquefaction terminal project at Lusby in Maryland, US.

The US-based firm is marketing 4.6 mmtpa, out of which GAIL has booked 50% of such capacity for the period of 20 years. As per the agreement GAIL will secure 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.

Earlier, GAIL had signed an agreement with Sabine Pass Liquefaction, a subsidiary of Cheniere Energy Partners of the US, for a supply of 3.5 mt a year LNG.

Significance of the deal signed

• The deal would enhance GAIL’s scale of operations in the US where the company already have presence through their participation in a shale gas asset in the Eagle Ford basin.
• This deal would also provide GAIL with an opportunity to trade part of the volume in the international market apart from organizing the ships required to transport rest of the volume to India.
• The deal would provide GAIL with an outlet for the gas assets it holds in the US as LNG from Cove point could be exported to nearby markets and also brought to India with necessary permissions.