GAIL/WGL AGREEMENT 20 YEAR CONTRACT SIGNED DECEMBER 4 2014GAIL is India’s leading natural gas company with a presence along the entire hydrocarbon value chain spanning E&P, LNG, pipelines, LPG, petrochemicals, city gas distribution, etc. In order to meet the growing appetite of Indian market, GAIL has been expanding its global presence to secure long term gas supplies. GAIL has signed a 20 year Sales and Purchase Agreement with Sabine Pass Liquefaction LLC, a unit of Cheniere Energy Partners, USA for supply of 3.5 million tons per year of LNG. GAIL also signed a Terminal Service agreement for 2.3 million tons per year of LNG liquefaction capacity with Dominion Cove Point LNG, USA.
WASHINGTON--(BUSINESS WIRE)--WGL (NYSE: WGL), through its subsidiary, WGL Midstream today announced the execution of a gas sale and purchase, and capacity agreement with GAIL Global (USA) LNG LLC (GGULL), a subsidiary of GAIL (India) Limited (GAIL), under which WGL Midstream has agreed to sell up to 430,000 Dth/day of natural gas, for a term of approximately 20 years, commencing on the in-service date of the Cove Point LNG export facility. WGL expects that the majority of the natural gas would be purchased by WGL Midstream through an existing arrangement with Antero Resources Corporation (Antero), a premier producer and the most active operator in the Marcellus and Utica Shale region.
“We look forward to WGL Midstream’s long-term relationship with GGULL which capitalizes on the growing supply of abundant natural gas from the Marcellus Shale producing region. This growing supply source has been providing clean burning natural gas to the Northeast and Mid-Atlantic regions of the United States and now will supply the country of India as well," said Terry D. McCallister, Chairman, Chief Executive Officer, WGL Holdings, Inc. "This sales agreement is in line with our corporate vision that produces value for our customers, investors and communities and is another example of implementing our strategy to build a growing, long-term earnings stream consisting of efficient, customized energy solutions."
Commenting on the development, Mr. B. C. Tripathi, Chairman and Managing Director of GAIL, said, “We are delighted to partner with WGL Midstream which is a part of a group that has a rich history of over 160 years in the natural gas supply business in the mid-Atlantic region. This agreement is another milestone towards GAIL’s efforts in the sourcing of LNG to meet the rising gas demand in the Indian market."
Through the long-term agreement, WGL Midstream is GGULL’s sole supplier of a minimum of 340,000 Dth/day up to 430,000 Dth/day of clean and abundant natural gas through a full requirements contract over a 20-year period. WGL Midstream will make deliveries using transportation capacity released by GAIL through an asset management arrangement. WGL anticipates that the structure of these agreements will result in approximately $9 million in EBIT for the first full year.