US starts shipping LNG to India, first GAIL ship sets sail from Louisiana

More than six years after an agreement was signed, US-based Cheniere Energy has started supplying liquefied natural gas or LNG to India.

The first ship, Meridian Spirit, set sail from Louisiana and will reach Dabhol in Maharashtra by around 28 March, said GAIL, which is India’s largest gas supplier.

Under the terms of the supply agreement, GAIL would purchase approximately 3.5 million tonnes of LNG per year from Sabine Pass.

That is a substantial amount of gas, given that India’s total consumption of petroleum resources is only around 200 million tons per year, out of which LNG is about 15 mln tons.

The deal would also make the US India’s second biggest supplier of natural gas after Qatar, which supplies around 9 million tons per year, toppling Nigeria, which supplies about 2.3 mln tons per year.

This would also be the first substantial and long-term supply of LNG from the US to India. At present, the supply of LNG from the US to India is a minuscule 200,000 tons per year.

The new supply would be used for meeting the demand from India’s rapidly expanding network of domestic gas networks as well as other consumers.

“With supplies commencing from US, GAIL will have a diversified portfolio both on price indexation and geographical locations,” said GAIL MD BC Tripathi.

“This long term agreement would go in a long way in strengthening relationship between GAIL and Cheniere and reinforcing India-US trade ties,” he added.

The US is one of the world’s largest producers of gas, but is situated as far away as possible from India and China, two of the fastest growing markets for hydrocarbons.

Cheniere CEO Jack Fusco said the commencement of supplies marked the start of a “long and productive relationship” between Cheniere and GAIL.

“GAIL is one of the foundation customers of Cheniere having signed the contract in 2011 and India remains an important market for LNG, and one that we hope will continue to show signs of growth,” he said.

“We look forward to decades of mutually beneficial cooperation between Cheniere and GAIL.”

Among those who saw off the ship was India’s Consul General in Houston, Dr Anupam Ray, indicating the importance attached to the event.

GAIL plans to have over 16,000 km of pipeline by 2020.

It currently commands a 75% market share in gas transmission and has a gas trading share of over 50% in India.

It is also planning to invest over a billion dollars into its City Gas Distribution projects.

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