Cheniere unit signs LNG supply deal with GAIL (India)

Sabine Pass Liquefaction, a unit of US-based Cheniere Energy Partners, has signed an agreemant with GAIL (India) to supply liquefied natural gas for 20 years.

Under the deal, GAIL will buy about 3.5 million tons per annum of LNG from the Cheniere arm beginning in 2017.

The companies have an option to extend the LNG supply agreement by up to ten years.

The LNG will be delivered from train four of Cheniere’s Sabine Pass LNG terminal in western Cameron Parish, located in the US state of Louisiana.

The terminal is being developed in phases and will include up to four liquefaction trains with a total capacity of producing up to 18 million tons a year of LNG.

Sabine Pass Liquefaction aims to sell about 14 million tons per annum of the capacity under long-term agreements.

The company has recently reached its targeted annual contract quantity of seven million tons per annum for the first phase of the project and the deal with GAIL (India) is the first contract for the project’s second phase.

GAIL (India) chairman and managing director BC Tripathi said the deal with Cheniere will help the Indian state-run company ensure long-term gas supply to meet growing demand in the Indian market.

"This will be in addition to other initiatives being undertaken by GAIL which includes building captive LNG facilities in India and augmenting its transmission capacity from 175mmscmd to more than 300mmscmd over the next two years," Tripathi said.

The LNG supply deal with GAIL (India) is subject to several conditions, including but not limited to Sabine Pass Liquefaction obtaining regulatory approvals and making a final investment decision to build the second phase of the LNG receiving terminal.

GAIL (India) has recently purchased shale gas assets in the Eagle Ford shale acreage of Carrizo Oil & Gas in the US.