In its first agreement to buy LNG from US, Petronet LNG, India's biggest liquid gas importer, on Thursday said it has signed an initial pact with Houston-based United LNG to buy 4 million tonnes of liquefied natural gas per annum for 20 years beginning 2018.
"We have signed a preliminary agreement to import LNG from US," Petronet Director (Finance) R K Garg told PTI.
Petronet will sign the final agreement called the gas sale and purchase agreement after United LNG obtains approval of the US Department of Energy to export gas in its liquid form (LNG) to a nation with which Washington does not have a free-trade agreement (FTA).
"Detailed terms and conditions including price will be finalised later," he said adding the price will be linked to benchmark Henry Hub rates.
Petronet will buy 4 million tonnes of LNG annually from United LNG's Main Pass Energy Hub in the Gulf of Mexico.
United LNG is developing the MainPass export terminal with a capacity of 24 million tonnes per annum, in association
with Freeport McMoRan Energy LLC.
"They said the project will be ready by 2017-18 and we expect to begin imports sometime in 2018," he said.
Petronet follows state-owned gas utility GAIL India Ltd's footsteps to lock in LNG supplies from US with price linked to the Henry Hub. GAIL in 2011 signed contract to buy 3.5 million tonnes per annum of LNG for 20 years from Cheniere Energy beginning 2017.
GAIL has also booked capacity to export another 2.3 million tonnes at US-based Dominion Energy's Cove Point liquefaction plant from 2017.
Petronet, Garg said, may also pick up a stake in United LNG's liquefaction facility in the Gulf of Mexico. The liquefaction plant converts natural gas into liquid at sub-zero tempratures so that it can be moved in ships.
The company currently buys 7.5 million tonnes a year of LNG from RasGas of Qatar on a long-term contract. The LNG is imported at its 10 million tonnes a year Dahej terminal in Gujarat.
It is also building a 5 million tonne capacity import facility at Kochi in Kerala this year and a similar capacity terminal at Gangavaram in Andhra Pradesh by 2016.
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"We have signed a preliminary agreement to import LNG from US," Petronet Director (Finance) R K Garg told PTI.