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India's Gail looks to swap US LNG cargoes

Houston — India-based Gail is actively seeking to swap some of its contracted US LNG supplies, the Economic Times of India reported Thursday.

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In an expression of interest issued Wednesday, Gail noted an interest to swap LNG on an FOB basis with parties in countries where LNG trade is not prohibited by US law or sanctions. In return, Gail is seeking equivalent volumes on a DES basis at Dahej, Dabhol, or any other terminal at a mutually predetermined price from its own offtake arrangements or supply portfolio.

Gail said its motive in issuing the EOI was to optimize the cost involved in long shipping voyages from the US to India. Market sources said Gail believes it can save 40-50 cents/MMBtu through a swap.

In 2011, Gail signed a 20-year agreement to purchase 3.5 million mt/year of LNG (163 Bcf or 4.65 Bcm of gas) from Train 4 at Cheniere's Sabine Pass terminal in Louisiana. Platts Analytics expects Train 4 to come online during first-quarter 2018.

Article Continues below...

In addition to the offtake agreement with Cheniere, in 2013 Gail signed a 20-year agreement with Dominion Cove Point LNG to purchase 2.5 million mt/year of LNG. But by 2015, with 6 million mt/year purchased from US LNG operators, Gail began selling portions of its US volumes. In March 2015, Gail sold 1 million mt/year to Shell, followed by the sale of another 1 million mt/year to an undisclosed buyer.

--Chris Pedersen,
--Edited by Jason Lindquist,