GAIL's First Time-Swap Deal for US LNG with Gunvor
Indian state-owned gas company GAIL has reached a deal with Swiss energy trading firm Gunvor to swap American liquefied natural gas (LNG) cargoes for shipments from other sources, Reuters reported.
It is the first time-swap agreement by GAIL, which is trying to juggle its LNG portfolio to cut costs for price-sensitive Indian customers after a sharp fall in Asian spot prices made its U.S. gas unattractive.
GAIL will sell Gunvor 0.6 million tonnes of next year's LNG cargoes from Cheniere at a premium to GAIL's contracted price, FOB Sabine Pass, Louisiana, under the terms of the deal.
GAIL has signed a 20-year purchase agreement for 3.5 mtpa of gas from Cheniere's export facilities, plus another 2.3 mtpa from Dominion Energy's Cove Point plant.
The deal equates to around 5 percent of India's 2015/16 LNG imports and will support a government push to promote the use of the cleaner fuel in fertiliser and the power sector, even as India's local gas production is falling.