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First LNG Shipment From United States Reaches Maharashtra

Last October, India imported its first shipment of crude oil from the US. The US had stopped oil exports in 1975, but this ban was lifted by former US President Barack Obama in 2015.

PTI

Updated:March 30, 2018, 5:45 PM IST
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First LNG Shipment From United States Reaches Maharashtra
Representative image (Reuters)
New Delhi: India on Friday received its first LNG cargo from the US under a long-term supply deal when a ship carrying super-cooled natural gas arrived at Dabhol in Maharashtra.

A charter ship, MV Meridian Spirit arrived at Dabhol after 25 days voyage from Louisiana, state-owned gas utility GAIL India Ltd said in a press statement. GAIL India has contracted 3.5 million tonnes per annum of liquefied natural gas (LNG) from US energy firm Cheniere Energy's Sabine Pass liquefaction facility in Louisiana. The first cargo from the project arrived at Dabhol, the city of India's biggest gas-fired power plant.

It has also contracted long-term volumes for another 2.3 million tonnes at Dominion Energy's Cove Point liquefaction plant. "GAIL is one of the early movers to contract US LNG and has 5.8 million tonnes per annum of US LNG in its portfolio. GAIL shall be receiving around 90 cargoes per annum from Sabine Pass and Cove Point LNG terminals," the statement said.

The LNG, he said, is indexed to US Henry Hub gas index as well as crude oil. "GAIL will have an optimum portfolio mix of LNG indexed to Henry Hub (HH) and crude oil and the customers will benefit from such a unique price blend," it said.

The arrival of 'Meridian Spirit' at Dabhol marks beginning of LNG supplies under the Henry Hub-indexed contracts, it said. The vessel arrived close on the heels of Dabhol power plant and the adjoining LNG receipt terminal being split into two separate companies. While state-owned electricity generator NTPC is the lead for the power block, GAIL is the majority owner of Konkan LNG Pvt Ltd, the firm which will run the 5 million tonnes a year LNG receipt facility.

Last October, India imported its first shipment of crude oil from the US. The US had stopped oil exports in 1975, but this ban was lifted by former US President Barack Obama in 2015. GAIL had signed a sale and purchase agreement (SPA) with the US LNG exporter Cheniere Energy in December 2011. The SPA went into effect March 1. Under terms of the agreement, Cheniere will sell and make available for delivery to GAIL about 3.5 million tonnes a year of LNG.

Cheniere's LNG is based on natural gas sourced from the US market, which provides access to abundant and low-cost gas resources. GAIL said India's trade with the USA, which stood at USD 126.1 billion in 2017, is expected to increase owing to large-scale imports of LNG and crude oil in coming years. "GAIL alone would be procuring approximately USD 2 billion worth of LNG per annum from USA from FY 2018-19," the statement said.

Cheniere Energy, Inc is the leading exporter of US LNG. It is currently operating and constructing its Sabine Pass LNG facility in Louisiana and is constructing a second liquefaction facility near Corpus Christi, Texas. When both projects are complete, it is expected to be a top-5 global supplier of LNG.

GAIL is India's biggest natural gas transportation and marketing company. It is expanding pipeline network by 4,000 km at an investment of over USD 3 billion to operate over 15,000 km by 2020. GAIL commands 75 percent market share in gas transmission and has a gas trading share of over 50 percent in India.

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| Edited by: Tarun Bhardwaj
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