GAIL signs pact to use part of Dominion's gas terminal

4/1/2013

GAIL signs pact to use part of Dominion's gas terminal

BY SAURABH CHATURVEDI

NEW DELHI -- GAIL said that it has signed an agreement to use half the capacity that Dominion Resources plans to add at a LNG terminal in the United States.

The 20 year agreement is part of the efforts by GAIL‘s pipeline utility to source natural gas from the United States to meet increasing energy demand in its home market.

Dominion plans to add 4.6 MMmt of annual capacity at its Cove Point LNG liquefaction terminal project in Maryland. It can currently handle 11.7 MMmt.

Construction work to expand the line will start by 2014 and operations may start in 2017, GAIL said.

It did not give any financial terms.

GAIL said it is looking at the possibility of using the Cove Point facility to handle gas from two shale gas basins in North America.

"This would enhance GAIL's scale of operations in the United States where we already have a presence through our participation in a shale gas asset in the Eagle Ford basin" Chairman B.C. Tripathi said in a statement. "Our upstream acquisition efforts for gas sourcing and hedging would now intensify in the United States."

India faces a shortage of natural gas. Domestic output fell 20.1% in February to 2.88 Bcm, hurt by a drop in the output at Reliance Industries D6 block off India's east coast.

GAIL has been sourcing LNG from overseas to meet India's expanding demand. In 2011, it signed a contract to buy around 3.5 MMmt of LNG annually for 20 years from Cheniere Energy's Sabine Pass facility in Louisiana. It also bought Carrizo Oil & Gas 20% stake in the Eagle Ford acreage in South Texas in the same year.

Dow Jones Newswires

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