GAIL signs agreement to buy 3.5 MT a year LNG from US firm

The Sales and Purchase Agreement has a term of 20 years commencing upon the date of first commercial delivery, and an extension option of up to 10 years. The LNG from Sabine Pass shall form a part of the basket for feeding LNG to Dabhol terminal in Maharashtra and Kochi in Kerala

New Delhi: State-owned gas utility GAIL India on Sunday said it has signed an agreement to buy 3.5 million tonnes (MT) a year of LNG for 20 years from a US firm to meet India’s growing energy needs, reports PTI.

“GAIL has signed a Sales and Purchase Agreement (SPA) for supply of LNG over 20 years with Sabine Pass Liquefaction LLC, a subsidiary of Cheniere Energy Partners LP, USA for supply of 3.5 million tonnes per annum of LNG," the company said in a press statement here.

Supplies may start as early as 2016.

“Under the SPA, GAIL will pay Sabine Liquefaction as per contractual provisions on a Henry Hub (US gas benchmark) basis after transfer of custody on FOB. LNG will be loaded onto GAIL’s vessels,” it said.

The SPA has a term of 20 years commencing upon the date of first commercial delivery, and an extension option of up to 10 years.

The LNG from Sabine Pass shall form a part of the basket for feeding LNG to Dabhol terminal in Maharashtra and Kochi in Kerala.

GAIL chairman and managing director BC Tripathi said: “The SPA with Cheniere will help GAIL to ensure long term gas supply for the 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 175 million metric standard cubic metres per day (mmscmd) to over 300 mmscmd over the next two years.

“GAIL will join BG and Gas Natural Fenosa as the next foundation customer for our Sabine Pass liquefaction project.

GAIL is India’s leading natural gas company and its largest shareholder is the Government of India,” said Charif Souki, chairman and CEO.

“We are building a strong portfolio of customers, consisting of energy companies engaged in the natural gas, LNG and power markets with operations spanning the globe.

“We continue to hold advanced discussions with additional global LNG buyers and expect to complete commercial discussions for the remaining capacity of the second phase of the project in the coming weeks,” he said.

The LNG would be supplied from train four of the Sabine Pass LNG receiving terminal located on the Sabine Pass Channel in western Cameron Parish, Louisiana. The Sabine Pass LNG terminal project is being developed by Sabine Liquefaction and would include up to four liquefaction trains capable of producing up to 18 MTPA of LNG.

The project is being developed in phases with each LNG train commencing operations approximately six to nine months after the previous train.

Sabine Liquefaction has recently announced that it has reached its targeted annual contract quantity of 7 MTPA for the first phase and is advancing towards making a final investment decision for the development and construction of the first two liquefaction trains.

The SPA with GAIL represents the first contract for the second phase of the project, which will also include two liquefaction trains with combined production capacity of 9 MTPA.

“The SPA is subject to certain conditions precedent, including but not limited to Sabine Liquefaction receiving regulatory approvals, securing necessary financing arrangements and making a final investment decision to construct the second phase of the liquefaction project,” the statement said.

GAIL has already established an office in Houston and acquired shale gas assets in Carrizo’s Eagle Ford Shale acreage and is further looking for shale gas assets in the US, Mr Tripathi said.

The firm has acquired its first shale gas assets in the US when its wholly-owned US subsidiary GAIL Global (USA) Inc bought 20% interest in Carrizo’s Eagle Ford Shale acreage.

Cheniere Partners owns 100% of the Sabine Pass LNG receiving terminal located on the Sabine Pass Channel in western Cameron Parish, Louisiana.

The Sabine Pass terminal has regasification and send-out capacity of 4 billion cubic feet per day (Bcf/d) and storage capacity of 16.9 billion cubic feet equivalent (Bcfe).

Cheniere Partners is developing a project to add liquefaction and export capabilities to the existing infrastructure at the Sabine Pass LNG terminal.
 

User

Industrial output -5.1%—worst since 2008-09 global recession

Industrial output actually shrunk by 5.1% in October—a contraction which is the worst since March 2009, when the world was hit by a global slowdown

India’s industrial output shrunk by 5.1% in October, mainly on account of the sharp contraction in the manufacturing and dismal performance of the capital goods sector. The current decline is the worst since March 2009 in the midst of the global slowdown.

The Index of Industrial Production (IIP) had recorded 1.9% growth in September 2011, which has now been revised to 2%. IIP had registered an 11.3% growth in October last year.

Last week, the finance ministry cut its gross domestic product (GDP) growth forecast for the current fiscal to 7.5% (+/- 0.25%) from 9% estimated in February.

The decline in industrial production numbers, as per the latest data, suggests continued sluggishness in the economy, experts said.

As per data released by the government today, industrial output grew by 3.5% in the April-October period this fiscal against 8.7% in the same period last year.

Output of the manufacturing sector, which constitutes over 75% of the index, declined by 6% in October compared to a growth of 12.3% in the same month of 2010.

Besides, mining output declined by 7.2% in October this year, as against a growth of 6.1% in October last year.

Production of capital goods fell sharply by 25.5% in the month under review. The segment had grown by 21.1 per cent in the corresponding month of 2010.

Output of consumer goods also fell by 0.8% during the month under review, as against a growth of 9.3% in the corresponding month of 2010.

Furthermore, consumer durables production declined by 0.3%, compared to a growth of 14.2% in October last year.

During the month under review, output of consumer non-durables fell by 1.3%. The segment had expanded by 5% in October last year.

However, electricity production grew by 5.6% during the month under review, as compared to 8.8% growth in October 2010.

India’s economy grew by 6.9% in July-September 2011, the slowest rate of expansion in nine quarters.

India Inc had attributed the slowdown to rising interest rates, which have led to an increase in the cost of borrowing, thus hindering fresh investment.
The Reserve Bank of India (RBI) has hiked interest rates 13 times since March 2010 to tame inflation however, headline inflation has been above the 9% mark since December last year.

User

COMMENTS

Shekhar

5 years ago

Paying the price for unproductive budget giveaways

Steel ministry sees Rs2.5 lakh crore investment in 12th Plan

The working group on the steel sector for the 12th Five Year Plan assessed that steel production of the country will go up to 149 MTPA in 2016-17 from 89 MTPA likely in FY11-12. Funds required to support the 60 million tonne additional capacity would be around Rs2.5 lakh crore, it added

New Delhi: The steel ministry estimates that around Rs2.5 lakh crore investment will be required in the next five years to raise the domestic steel making capacity by 60 million tonnes per annum (MTPA), reports PTI.

The working group on the steel sector for the 12th Five Year Plan assessed that steel production of the country will go up to 149 MTPA in 2016-17 from 89 MTPA likely in FY11-12.

The steel making capacity of the country stood at 78 MTPA in FY10-11.

“The requirement of financial resources to support an additional capacity creation of about 60 million tonnes will be approximately Rs2.5 lakh crore during the 12th Plan (2012-17),” the group, headed by steel secretary PK Mishra, said in its final report.

The committee expects country’s steel making capacity to go up to 104.66 MTPA in 2012-13, 119.01 MTPA in 2013-14, 129.39 MTPA in 2014-15, 140.57 in 2015-16 and to 149 MTPA in the final year of 12th Plan Period.

It also expects Posco to start production from its Orissa plant during 2016-17 with 4 MTPA capacity.

Warning that securing such a large amount of investible funds at a reasonable cost would be a challenging proposition, the committee said it was imperative to review steel-related sectoral caps by banks and consider easing of norms relating to external commercial borrowings (ECBs).

“Special purpose long-term financing facility may also be created to finance huge investment in new steel plants,” it said.

The committee estimates the requirement of iron ore and coking coal to feed the additional capacity will increase to 206.2 million tonnes and 90.2 million tonnes respectively from 115 million tonnes and 43.2 million tonnes now.

It expects domestic steel demand to go up by an annual average of 10.3% to 113.3 MTPA in the final year of the 12th Plan Period from 65.61 MTPA in FY10-11.

“It is likely that in the next five years, demand will grow at a considerably higher annual average rate of 10.3% as compared to around 8.1% growth achieved during the last two decades (1991-92 to 2010-11),” it said.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)