B.C. Tripathi, Chairman and Managing Director, GAIL (India) Ltd, has said that the public sector gas major had allocated 1 million tpa of LNG volume sourced from the United States to its subsidiary GAIL Global (Singapore) Pte Ltd for trading in the global market. This initial experience of global trading would help develop requisite skill sets and competence within the company and expand its business in the global LNG market in a self-sustaining manner.
GAIL opened its Singapore office in 2011 through GAIL Global (Singapore) Pte Ltd for sourcing natural gas and for trading in LNG and petrochemicals.
Tripathi was elaborating on the company’s plans for the immediate future at a recent ceremony in Paris, France, where he was conferred with the prestigious ‘Best LNG Executive Global Award’ for 2013 at CWC’s 14th World LNG Summit.
GAIL has planned to venture into LNG shipping to bring LNG volume from the US, doubling the capacity of the Dabhol LNG terminal in Maharashtra, upstream investment in Tanzania, and setting up a floating LNG regasification terminal in Andhra Pradesh along with GDF Suez and Shell.
Tripathi emphasised that, going forward, innovative new business models would become essential for the LNG industry. This could provide flexibility and security in supplies while reducing the total cost of LNG to consumers. He reiterated that GAIL would continue to promote regional cooperation among Asian buyers and create Asian Gas Index so that LNG prices for Asia were in sync with market prices.
The GAIL CMD has been instrumental in taking the lead in advocating and promoting the formation of an Asian Pricing Index for LNG and seeding for an Asian Cooperation Forum on gas and liquefied natural gas. Both these initiatives have found support in all of Asia and beyond.
In June this year, GAIL (India) Ltd and Shipping of Corporation India Ltd signed an MoU for transportation of LNG sourced by GAIL from USA. Under this agreement, both GAIL and SCI would cooperate in the transportation of 5.8 million tpa of LNG from Sabine Pass and Cove Point terminals in USA. The cooperation would include SCI assisting GAIL in the charter hiring of LNG ships and GAIL assigning step-in right to SCI in the ownership of LNG ships.
“LNG has become an important business vertical of GAIL and the experience of SCI in the shipping business will bring huge synergetic advantage for both the companies. We expect that this partnership will enable faster development of in-house fleet operations capabilities for the company,” Tripathi had said.
GAIL was the first Asian company to sign a long-term LNG Sales and Purchase Agreement with Sabine Pass Liquefaction, LLC, USA, in 2011, for supply of 3.5 million tpa LNG over 20 years. This agreement had price linkage with Henry-Hub price instead of crude oil and signalled a new approach in gas pricing.
On the back of this deal, GAIL signed a Terminal Service Agreement with Dominion Cove Point LNG LP for 2.3 million tpa liquefaction capacity in the Cove Point liquefaction terminal in USA. The US subsidiary of GAIL contracted half of Dominion’s capacity for 20 years.
The transportation of LNG in both cases is expected to begin from mid-2017.
Besides, GAIL also executed a long-term Gas Sales and Purchase Agreement with Gazprom Marketing and Trading Singapore Ltd for supply of 2.5 million tpa LNG per annum from its Shtokman production facilities over a period of 20 years. The gas enterprise also signed an MoU with EDF Trading, USA, for cooperation in the areas of North American upstream equity investments, gas supply to export facilities and LNG supply optimisation.