India may sign $12.5 bn LNG deal with Australia

India may sign a $12.5 billion deal with Australia in the next two-three months to import 2.5 million tons of liquefied natural gas (LNG) annually for 25 years beginning mid-2010. "We have concluded most of the agreements. A formal agreement can be signed as early as March-end," said Petroleum Secretary M S Srinivasan.

Petronet LNG Ltd will import 2.5 million tons of LNG from Chevron-operated Gorgon Project. "Chevron Australia has a mandate to sign a sale deal with Petronet by June 30 but a formal agreement can be inked within next 60 days," he said.

Petronet LNG will import LNG from the Gorgon project at its under- construction Kochi terminal in Kerala. "Supplies will begin around mid-2010," he said but refused to give the price at which the LNG will be imported.
Sources, however, said the deal is worth around $12.5 billion. The company is promoted by Oil and Natural Gas Corporation, Indian Oil Corp, GAIL (India) and Bharat Petroleum Corp.

The Gorgon Project plans to develop the Greater Gorgon gas fields, located about 130 km off the north-west coast of Western Australia. The Greater Gorgon gas fields contain resources of about 40 trillion cubic feet of gas, Australia's largest known undeveloped gas resource.

Chevron is operator of the Project with a 50 per cent interest, with ExxonMobil and Shell each holding 25 per cent. The project involves building two trains capable of producing a total of 10 million tons per annum of LNG. About three shipments a week are expected to leave a dedicated LNG loading jetty.

Sources said Petronet had over the last one year concluded techno-commercial and legal agreements for the purchase of 2.5 million tons of LNG from Gorgon project. "Final drafts are being exchanged and a formal agreement can be signed within a next couple of months," a source said.
Petronet currently imports 5 million tons per annum of LNG from Qatar at its Dahej terminal in Gujarat. It is building another LNG receipt and regassification terminal at Kochi in Kerala with a capacity of 2.5 million tons per annum, expandable to 5 million tons. Kochi terminal will be ready by early 2010.

Source: The Pioneer, New Delhi
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