Govt plans $12.5bn LNG deal with Australia

The government is likely to sign a $12.5 billion deal with Australia in the next two-three months to import 2.5 million tonne per annum of liquefied natural gas (LNG) for 25 years beginning mid-2010.

"We have concluded most of the agreements... A formal agreement can be signed as early as March-end," petroleum secretary M S Srinivasan said here.

Petronet LNG will import 2.5 million tonne 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, a company promoted by Oil and Natural Gas Corp, Indian Oil Corp, GAIL (India) and Bharat Petroleum Corp, 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 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% interest, with ExxonMobil and Shell each holding 25%.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.

Source: Business Standard, New Delhi
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