GAIL (India) today said its subsidiary, GAIL Global USA LNG LLC, has signed an agreement with the US-based WGL Midstream Inc (WGLM) for sourcing natural gas to produce about 2.5 million tonnes of LNG at its Cove Point Terminal, Maryland, US.
WGLM is a subsidiary of WGL Holdings Inc., a prominent natural gas company in the US.
GAIL, however, did not disclose the price at which it is sourcing the gas. The prevailing gas price in the US is in the range of $4-4.5/million British thermal units.
The definitive gas sale and purchase agreement has been signed for 20 years and supplies are expected to commence from 2017-end when the LNG terminal, in which the GAIL subsidiary holds liquefaction capacity, becomes operational.
While the intention is to get this gas to India, the modalities are yet to be worked out, an official told Business Line .
Commenting on the development, B. C. Tripathi, Chairman and Managing Director of GAIL, said: "We are now in the process of chartering LNG ships, thereby entrenching our presence across the complete LNG supply chain and bringing more value to Indian customers," Tripathi said.
In a statement issued by GAIL, Terry D. McCallister, Chairman and Chief Executive Officer, WGL Holdings, Inc. 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 the Northeast and Mid-Atlantic regions of the US and now will supply India as well."
Pace Global (a Siemens business), Thompson & Knight, and Amarchand Mangaldas assisted GAIL on the commercial and legal aspects of the transaction. WGL Midstream engaged Vega Energy Partners, Ltd., for the execution of these transactions. Vega will also play an ongoing role in the implementation of these contracts.