GAIL (India) Limited has signed a preliminary deal with Shell for the potential sale of liquefied natural gas (LNG) supply sourced from its portfolio, made up of US production, three sources with knowledge of the matter said.
Gail has also signed preliminary agreements with other companies, the sources said, one of whom added that the talks with Shell were at an advanced stage.
Gail first announced plans to sell 1 million tonnes per annum (mtpa) of supply over a 5-year period in 2013 but negotiations with buyers got bogged down over differing price views.
Gail held out against accepting what it saw as overly stingy premiums to the price it paid Cheniere to acquire the gas in the first place, according to information reported at the time.
The company has purchased 3.5 mtpa of LNG over 20 years from US-based Cheniere Energy from 2017.
It has also booked capacity to export another 2.3 mtpa at US-based Dominion Energy's Cove Point liquefaction plant from 2017.
Shell's offer was among the most attractive received, one of the three sources said.
Gail's Memorandum of Understanding with Shell was signed prior to Shell's announced $70 billion buyout of LNG heavyweight BG Group. It was not clear whether the move will lessen Shell's appetite for additional supply.
The sources played down any impact from Shell's BG merger on its interest in the LNG supply from Gail.
(Reporting by Oleg Vukmanovic; Editing by Ruth Pitchford)
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today