EnergyAsia, December 8 2014, Monday) — US-based WGL Midstream Inc has agreed to supply natural gas to the local subsidiary of state-owned GAIL India Limited for the production of 2.5 million tonnes/year of liquefied natural gas (LNG) from the export-oriented Cove Point terminal now under construction in Maryland state.

WGL Holdings, a Washington DC clean energy and natural gas producer, said its subsidiary expects to launch the 20-year supply agreement with GAIL Global USA LNG when the US$3.8-billion terminal starts operating in late 2017.

GAIL, India’s largest state-owned natural gas utility, has booked 2.3 million tonnes of Cove Point’s capacity with owner Dominion Cove Point LNG which received approval from the US Energy Department in October to export LNG. Cove Point has direct access to the Marcellus and Utica reserves that are among the most prolific shale gas basins in North America.

The deal underlines the New Delhi-based firm’s growing focus on the US for its gas supply as it has also signed a 20-year deal to import LNG from Cheniere Energy Inc’s Sabine Pass terminal in Louisiana state starting 2017.

GAIL chairman and managing director B. C. Tripathi described its agreement with WGL Midstream as a “milestone” in the Indian firm’s efforts to source LNG to meet his country’s rising demand for clean energy.

“We are in the process of chartering LNG ships thereby entrenching our presence across the complete LNG supply chain,” he said.

WGL Holdings chairman and CEO Terry D. McCallister said his company is looking to build a long-term relationship with GAIL through the growing supply of natural gas from the Marcellus.

“This growing supply source has been providing clean burning natural gas to Northeast and Mid-Atlantic regions of the US and now will supply India as well,” he said.