India's Petronet LNG Signs Initial Deal to Buy 4 Million Tons of LNG a Year

   By Debiprasad Nayak 
 

MUMBAI--India's state-run Petronet LNG Ltd. (532522.BY) said Thursday that it has signed a preliminary agreement with U.S.-based United LNG, LP to purchase around 4 million metric tons a year of liquefied natural gas for 20 years.

India, one of the biggest importers of oil and gas in Asia, meets more than 75% of its oil and gas requirements through imports, and its companies have been scouting for energy assets overseas amid falling output from ageing local assets.

Petronet LNG said in a statement that the agreement is expected to be finalized by the end of this year.

The supply of LNG could begin sometime in 2017-18, R.K. Garg, Petronet LNG's director of finance, told television channel CNBC TV18.

Buyers in Asia are looking to the U.S. to meet their rising energy requirements, as the shale revolution has left North America with a huge surplus of gas and prices that are far below those in Asia or Europe. LNG prices in Asia are often three to four times higher than in the U.S. because of a regional supply deficit.

While the U.S. has a surplus of cheap gas now, substantial exports could push domestic prices higher, which in turn could ignite a political backlash against foreign sales.

Petronet LNG said United LNG would supply the LNG through the Main Pass Energy Hub based off the Louisiana coast in the southern U.S.

In 2011, GAIL (India) Ltd. (532155.BY), another state-run gas processing and distribution company, signed a contract to buy around 3.5 million tons of LNG annually for 20 years from Cheniere Energy's (LNG) Sabine Pass facility in Louisiana.

Write to Debiprasad Nayak at [e-mail]

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