India’s largest natural gas importer, Petronet, has signed a supply agreement with the United State’s United LNG to receive liquefied natural gas for the next twenty years. According to the agreement, the U.S. company will supply a minimum of 4 million tons of LNG per year to India over a period of two decades through the Main Pass Energy Hub in the Gulf of Mexico. This is Petronet’s first U.S. LNG supply off-take agreement, which is expected to fulfill India’s growing LNG needs.
Prior to signing the agreement with United LNG, Qatar’s RasGas was India’s sole long-term natural gas supplier. However, India had opted for another supplier as its LNG needs accentuated over the years. Of late, the U.S. has emerged as a reliable and a cost efficient LNG supplier and has become the world’s target for secure LNG. India’s energy demand is increasing at a rate of 5 to 6 percent annually and has become the world’s sixth largest LNG importer.
Although the U.S. State Department of Energy approved the Main Pass facility as a trade route to export gas to any country that has or will enter into a free trade agreement with the U.S., approval for exports to non-free trade countries is still pending. Officials at Petronet believe that this is a preliminary agreement and stressed that the two parties will sign the binding agreement once United LNG receives the approval from the U.S. Energy Department. In addition, if the agreement is signed by the end of this year, United LNG will begin supplying LNG by 2018.