Australia-listed Liquefied Natural Gas Ltd (LNG Ltd) has signed a pact to potentially supply gas from its planned Magnolia LNG project in the US to India for 20 years.
LNG Ltd signed a Heads of Agreement (HOA) with Vessel Gasification Solutions, Inc (VGS) for supply of 4 million tonnes a year of LNG from its Lake Charles, Louisiana, project for 20 years, the company said in a statement.
"The non-binding HOA provides for a 20-year Free-on-Board (FOB) Sale and Purchase Agreement (SPA) of up to 4 million metric tonnes per annum" of liquefied natural gas, it said.
VGS Group, an Indo-American company, is developing a floating LNG import and regasification terminal offshore Kakinada in Andhra Pradesh.
The project has two stages, with phase one comprising building a Floating Storage Regasification Unit (FSRU) with a capacity of 4.47 million tonnes, which in the second phase would be scaled up to 8.94 million tonnes.
The statement said VGS is targeting to be the first liquefied natural gas (LNG) import facility on the east coast but it did not give timeliness for either setting up the import terminal or supply of gas from US.
"The obligations of the parties are conditional upon (its wholly-owned subsidiary) Magnolia LNG, LLC's satisfaction with or waiver of conditions precedent including financial close of the Kakinada terminal and satisfaction by VGS of defined credit requirements underpinning their LNG purchases within agreed time frames," the statement said.
Magnolia LNG (MLNG) is an 8 million tonne per annum or more LNG export terminal development in Lake Charles, Louisiana, USA.
LNG Limited's Managing Director & CEO Greg Vesey said: "We look forward to supplying long-term volumes to the Indian market to meet their growing needs for clean energy. Overall, this agreement represents another important step forward for the MLNG Project." "With the execution of this agreement, VGS is now in a prime position to execute on the first-mover advantage we have established on India's East Coast," said Gaurav Tiwari, President of VGS.
"We are very excited to take this step forward in our relationship with Magnolia, and we look forward to working with the Magnolia team to bring a significant tranche of US-produced LNG to a key new market on the East Coast of India," he added.
Magnolia LNG proposes to construct and operate up to four liquefaction production trains, each with a capacity to turn 2 million tonnes per annum of natural gas into liquid fuel (LNG) for ease of transportation.
The statement said Magnolia LNG is fully permitted and has requisite approvals to export gas to both FTA and non-FTA nations.
"Final investment decision and initiation of construction are expected upon execution of sufficient offtake agreements to support financing," it added.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
