GAIL Signs LNG Supply Agreement with France's GDF Suez

Bangalore: State-owned gas utility GAIL India has signed a contract with French energy giant GDF Suez to import 0.8 million tonnes of liquefied natural gas (LNG) from 2013 to 2014. "GAIL and GDF Suez have concluded a medium-term LNG supply agreement for supply of 12 cargoes from 2013 to 2014, epresenting a total of 0.8 million tonnes," the two firms said in a press statements. The agreement will help meet the nation's growing gas demand, which is expected to grow from 58 billion cubic meters in 2012 to 220 billion cubic meters in 2020, representing a compounded annual growth rate of over 18 percent. GDF would supply six cargoes of LNG in 2013 beginning January and an equal number in 2014. It will supply one cargo once in two months, most probably from its Yemen portfolio. The price of LNG would be linked to prevailing oil rates. The LNG could be imported at either the currently operating Dahej terminal of Petronet LNG in Gujarat or the almost-complete Kochi import facility in Kerala. The gas in its liquid form (LNG) can also be shipped in cryogenic vessels to the Dabhol terminal in Maharashtra that is awaiting commissioning. The companies did not offer further details. GAIL had previously roped in GDF Suez for a 3.5 million tonnes a year floating LNG import terminal it plans to set up off the east coast. The French firm would have 26 percent stake in the project. GDF, which holds 10 percent stake in Petronet LNG, had in November last year agreed to supply 9 cargoes of LNG to the nation's largest liquefied natural gas importer. GAIL has been expanding its global presence to secure gas supplies. It had earlier signed a 20 year Sales and Purchase Agreement with Sabine Pass Liquefaction LLC, a unit of Cheniere EnergyPartners, USA for supply of 3.5 million tonnes per year of LNG beginning 2017. It has also executed the Gas Sales Purchase Agreement (GSPA) with Turkmengaz of Turkmenistan for buying 38 million standard cubic meters per day of gas for 30 year supply through the Turkmensitan-Afghanisatn-Pakistan-India pipeline. GAIL Chairman and Managing Director B C Tripathi said, "This agreement with GDF Suez is yet another step by GAIL to bridge the demand supply deficit of the Indian market in the medium term." "This is in addition to other initiatives of GAIL towards LNG sourcing, creating LNG regasification infrastructure and augmenting transmission capacity significantly during the next two to three years," Tripathi said. GAIL owns and operates over 9,500-km of cross country natural gas pipeline network and can handle 175 mmscmd of gas. Jean-Marie Dauger, Executive Vice President of GDF SUEZ in charge of the Global Gas & LNG business line said, "signing of the LNG supply agreement with GAIL, the largest gas transport and marketing company in India, is a real satisfaction for GDF SUEZ." "Our natural gas portfolio is permanently optimised and thanks to its flexibility we are able to direct LNG volumes to the Asian market in response to its increasing LNG demand. Between 2010 and 2016, GDF SUEZ is planning to deliver about 10.8 million tonnes to Kogas, CNOOC, Petronas, Petronet, PTT and GAIL," he said. GDF SUEZ has a strong involvement in LNG activities in India. Since 1997, GDF SUEZ has also been a strategic partner of Petronet LNG(PLL), a company in which it holds a 10 percent stake. In November 2011, GDF SUEZ and PLL signed an agreement for the delivery of 9 cargoes over 2012.