GAIL signs 20-year LNG import deal with US firm Sabine
State-run GAIL has signed a 20-year deal with Sabine Pass Liquefaction to import liquefied natural gas from the US from 2017 to secure long-term supplies at prices linked to the US benchmark Henry Hub, company executives said.
At current price of gas in the US and prevailing liquefaction and transportation rates, the price would be $ 10-11 per unit in India, about $ 5-6 cheaper than the recent LNG contract with an Australia firm.
The deal can be extended by another 10 years with mutual agreement, GAIL executives said.
GAIL chairman & managing director B.C. Tripathi said: "The agreement with Cheniere will help company to ensure long term gas supply for the growing demand in the Indian market."
Sabine is a subsidiary of Cheniere Energy Partners, USA.
Industry experts said the current Henry hub price was $ 3.5 per unit, liquefaction cost is about $ 3-4 per unit, shipping charges range from $ 2-2.5 while re-gasification charges are about $ 1, adding up to a price of $ 10-11 per unit. The landed cost could change considerably in the next 5-6 years depending on Henry hub fluctuations.
India has signed a long-term deal with Gorgon gas project of Australia to import 1.5 mm ton starting from 2016-17, which would cost $ 15.8 per unit.
As per the deal, GAIL will pay Sabine Liquefaction as per contractual provisions on a Henry Hub basis after transfer of custody on FOB basis. LNG will be loaded onto GAIL's vessels.
"The SPA has a term of twenty years commencing upon the date of first commercial delivery, and an extension option of up to ten years," GAIL said.
GAIL will join BG and Gas Natural Fenosa as the next foundation customer for our Sabine Pass liquefaction project, said chairman and CEO Charif Souki of the US firm. GAIL is aggressively pursuing its business interests in India.