India for the first time starts importing LNG from US

India for first time has started process of importing Liquid Natural Gas (LNG) from United States. The development comes on the heels of India’s first import of crude oil from the US in October 2017.
State-owned GAIL will discharge its
The first US-sourced LNG shipment was imported by state-owned GAIL and was shipped it on board of its chartered LNG ship ‘Meridian Spirit’ from Cheniere Energy’s Sabine Pass LNG export facility in Louisiana.  It will be discharged at GAIL’s Dabhol terminal, Maharashtra.

Key Facts

GAIL had signed 20-year Sale Purchase Agreement (SPA) with US’ natural gas exporter Cheniere Energy in December 2011. Under it, GAIL will purchase around 3.5 Million Tonne of LNG per year from Sabine Pass. Cheniere Energy is currently operating and constructing its Sabine Pass LNG facility in Louisiana and is constructing second liquefaction facility near Corpus Christi, Texas.
This shipment will help GAIL to diversify its portfolio both on price indexation and geographical locations. Moreover, this long-term SPA will also strengthening relationship between GAIL and Cheniere and reinforcing India-US trade ties.

Background

India primarily imports LNG from Qatar and Australia under long-term contracts. In recent times, it has been trying to diversify its natural gas sources. Moreover, after former US President Barack Obama lifted US’s 40 year-old oil export ban, Indian oil and gas companies in response bought shipments of US crude to check for cost competitiveness and its compatibility with Indian refinery configuration. India is also trying to increase its use of natural gas in the energy mix from current 6% to 15% within five years inorder reduce dependence on oil and to secure energy supplies and reduce emissions by using more natural gas.

Month: Current Affairs - March, 2018