Cheniere's Sabine Pass in Line for $12 Billion Indian LNG Shale Gas Deal

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Written by Richard Finlayson, Industrial Info Resources (Sugar Land, Texas)--India's state-controlled GAIL India Limited (BSE:532155) (New Delhi, India) is reported to be in the final stages of signing a 20-year deal for the annual importation of 2 million tons of shale-sourced liquefied natural gas (LNG) from the U.S. East Coast. The U.S. company or companies involved have not yet been confirmed.

The deal could be worth more than $12 billion following the $20 billion deal GAIL signed in December 2011 with Cheniere Energy's (AMEX:LNG) (Houston, Texas) Sabine Pass Liquefaction for the annual import of 3.5 million tons of LNG.

The potential sale and purchase agreement is being checked over by legal advisors and Ernst & Young is conducting a financial and taxation due diligence on the deal.

GAIL has initiated talks with other U.S. and Canadian shale gas companies that are planning to export LNG from the East Coast. Reports say that these talks have stumbled on the prices being offered.

Shipping Corporation of India (SCI) has received a request to select the cheapest carrier from global charter companies to reduce shipping costs and the landed cost of the gas in India.

India has been forced to look at gas imports at a time when falling domestic production has caused a 40% gap in national gas supplies.

The possibility remains that the current gas deal could be stalled by U.S. policy to discourage energy exports to countries that are not its preferred trade partners, and to countries that continue to import oil and gas from Iran, which is on the U.S. trade embargo list.

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