BG Group inks LNG pact with Gujarat State Petroleum Corporation for 20 years

AHMEDABAD: BG has signed an initial agreement to supply up to 2.5 million tonnes a year of liquefied natural gas to state-owned Gujarat State Petroleum Corporation for 20 years.

The two companies are likely to sign a binding agreement by early next year and start gas supply by 2014, GSPC and BG said. The natural gas and LNG market in India has attracted global majors including BP, which is setting up a joint venture with Reliance Industries for gas marketing.

The companies did not divulge the commercial aspects of the deal but industry sources said LNG prices would be linked to the National Balancing Point, a British benchmark. BG Group will supply LNG from its global portfolio.

The contract will be the second-largest LNG procurement agreement in India. Petronet LNG imports 7.5 million tonnes per annum from RasGas under a long-term contract. For its proposed Kochi terminal, Petronet has signed a 20-year deal with Exxon Mobil Corp to source 1.44 million tonnes a year.

GSPC is aggressively scouting for LNG to supply industry, households and automobile users both in Gujarat and other regions. Earlier, GSPC signed an MoU to procure up to 2.5 mt per annum of LNG from Gazprom Global LNG.