India’s Petronet LNG Signs First Accord to Import Gas From U.S.Rakteem Katakey
Petronet LNG Ltd., India’s biggest liquefied natural gas importer, signed its first agreement to purchase the fuel from the U.S. as demand rises in Asia’s second-biggest energy consumer. The shares rose.
Petronet will buy 4 million tons of LNG annually from Houston-based United LNG LP’s Main Pass Energy Hub in the Gulf of Mexico for 20 years, the New Delhi-based company’s Finance Director R.K. Garg said in a phone interview. The price will be linked to benchmark Henry Hub rates and a final agreement will be signed by the end of this year, he said.
“Demand in India is rising and large volumes are available in the U.S. at competitive prices,” Garg said. “This is our first agreement from there and we’ll look for more.”
Petronet joins GAIL India Ltd., the nation’s biggest gas distributor, in securing supplies from the U.S. where a surge in production of the fuel from shale rock is turning the world’s biggest economy to an exporter from an importer. Indian companies including Reliance Industries Ltd. and Oil & Natural Gas Corp. are struggling to raise production at home, affecting supplies to power stations and fertilizer makers.
Petronet surged as much as 3 percent to 139 rupees in Mumbai and traded at 138.10 rupees as of 11:12 a.m. The stock has declined 12 percent this year, compared with a 0.5 percent drop in the benchmark S&P BSE Sensex index.
Natural gas prices in New York trading have increased 25 percent this year following a 12 percent gain last year. The May contract rose 0.2 percent to $4.175 per million British thermal units on the New York Mercantile Exchange as of 1 p.m. Singapore time. Japan paid $16.81 per million Btu for LNG imports in February. Henry Hub, in Erath, Louisiana, is the delivery point for Nymex futures, a benchmark price for the fuel.
Freeport McMoRan Energy LLC and United LNG are jointly developing the Main Pass export terminal with a capacity of 24 million tons per year, according to United LNG’s website. The project will start exports in 2017, according to the website.