US oil major Exxon Mobil Corp on Friday reached an agreement with India's Petronet LNG Ltd - its first Asian customer - to sell liquefied natural gas from its share in the Gorgon project, off Western Australia. Under the 20-year term contract, to be finalised in June, Exxon will annually supply 1.5 million metric tons of LNG to Petronet, the two companies said in a joint statement, without disclosing commercial details.
"An agreement has been reached on intent to supply LNG ... (the two companies) would continue working on binding agreements to conclude the purchase and sale in June," the statement said.
Petronet plans to ship the Gorgon LNG to its new receiving terminal being built in the southern Indian city of Kochi. The Kochi terminal will have a capacity to import 2.5 million tons of LNG a year and is expected to start operations in 2011.
Petronet's Dahej terminal in western India has doubled its capacity to 10 million tons. It gets 5 million tons of LNG from Qatar's RasGas under a long-term contract, slated to increase to 7.5 million tons by the year-end.
India is emerging as a key LNG market in Asia along with China at a time when traditional buyers like Japan are reducing purchases. Both India and China want to raise imports of cleaner-burning gas to cut reliance on burning coal and foreign oil.
"We are continuing discussion with other interested parties for the sale of LNG from Gorgon," an Exxon spokesperson told Bloomberg. She said almost all of Exxon's LNG share in the Gorgon project will likely be sold to Asian customers.
PetroChina's Chairman Jiang Jiemin in March said the company is likely to sign an LNG import deal with Exxon in the first half of this year.
The Gorgon field, with potential reserves of more than 40 trillion cubic feet of gas, is being developed by Exxon, Chevron Corp and Royal Dutch Shell PLC. Chevron is the largest owner of Gorgon, with a 50 per cent stake, and Royal Dutch Shell and Exxon hold 25 per cent each. Chevron recently won conditional approval from an Australian regulator for an expanded Gorgon project and expects to make a final investment decision before the end of the year.