(EnergyAsia, December 13 2011, Tuesday) — US Cheniere Energy Partners said a subsidiary has signed an agreement to supply India’s state gas utility GAIL (India) 3.5 million tonnes of liquefied natural gas (LNG) annually for 20 years, with an option to extend the deal for a further 10 years.

The Houston, Texas-based company said that starting 2017, Sabine Pass Liquefaction LLC will begin shipping LNG from the Sabine Pass LNG terminal in western Cameron Parish in Louisiana state using GAIL’s vessels.

India’s largest natural gas company will purchase LNG on an FOB basis based on a price indexed to the monthly Henry Hub quote plus a fixed component which the parties did not disclose.

Sabine Liquefaction is developing up to four liquefaction trains capable of producing up to 18 million tonnes/year of LNG at its Sabine Pass terminal. The company is aiming to sell 14 million tonnes of the capacity under long-term agreements, having recently achieved its targeted annual contract quantity of 7 mtpa for the first phase.

It is advancing towards making a final investment decision for the development and construction of two liquefaction trains. The sale to GAIL represents the first contract for the project’s second phase, which will also include two liquefaction trains with combined annual capacity of nine million tonnes.

Charif Souki, Cheniere’s chairman and CEO, said:

“GAIL will join BG and Gas Natural Fenosa as the next foundation customer for our Sabine Pass liquefaction project. 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, train three, in the coming weeks.”
B. C. Tripathi, GAIL’s chairman and managing director, said:

“The agreement 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 standard cubic metre a day (mmscmd) to over 300 mmscmd over the next two years. With an office established in Houston, GAIL has acquired shale gas assets in Carrizo’s Eagle Ford Shale acreage and is further looking for shale gas assets in the US.”

GAIL (India) Limited is the country’s leading gas transmission and marketing company under the Ministry of Petroleum and Natural Gas. It owns equity stakes in the Kochi and Dahej LNG terminals, and is building a regasification terminal at Dabhol on India’s west coast, and planning to develop another on the east coast.