US ships first LNG consignment to India under 20-year gas deal

India will, later this month, get delivery of the first natural gas consignment of a 3.5-million tonnes per annum of liquefied natural gas (LNG) contracted from the United States, which would go a long way in strengthening and reinforcing trade relations between the two countries, consul general of India Anupam Ray said on Tuesday.

State-owned gas utility GAIL India has contracted to import 3.5 million tonnes of liquefied natural gas (LNG) per annum from Cheniere Energy's Sabine Pass liquefaction facility in Louisiana under a 20-year gas import deal.

The sale and purchase agreement (SPA) signed between GAIL and the US LNG exporter Cheniere Energy in December 2011 went into effect on 1 March. Under terms of the agreement, Cheniere will sell and make available for delivery to GAIL about 3.5 million tonnes a year of LNG.

Ray on Tuesday flagged off the first LNG consignment from Cheniere's facility on ship 'Meridian Spirit' at the Ceniere Sabine Pass LNG terminal.

"It is a milestone in India-US relations as American LNG for GAIL India is flagged off from US Gulf coast. The US has recently started exporting LNG and India is a major buyer. Win-win for both nations - a market for a major US industry and a reliable energy source for India," Ray said.

"This long-term agreement would go a long way in strengthening the relationship between GAIL and Cheniere and reinforcing India-US trade ties," he said.

''With supplies commencing from the US, GAIL will have a diversified portfolio both on price indexation and geographical locations.

''The commencement of this agreement marks the start of a long and productive relationship between Cheniere and GAIL,'' Cheniere CEO Jack Fusco said. ''GAIL is one of the foundation customers of Cheniere, having signed the contract in 2011 and India remains an important market for LNG.''

The ceremony was also attended by Cheniere CEO Jack Fusco and GAIL chairman and managing director B C Tripathi.

Various Texas Congressman appreciated the initiative and got on to their tweets. Congressman Ted Poe representing the second district of the of Texas tweeted that, "it is a great news for TX! India has contracted to buy $2 billion of US LNG annually for 10 yrs. Excellent for job creation in TX, & is a milestone in US-India economic relations".

Congressman Pete Olson representing TX-22 in Congress tweeted, "Excited for liquid freedom – more US LNG heading from Houston to India! Economic win for Texas and our ally India".