Bloomberg: Gail’s U.S.-Linked LNG Breaking From Traditional Ties to Crude

Gail India Ltd. (GAIL), the nation’s largest natural gas distributor, is offering supplies from the U.S. at prices tied to the American benchmark as an alternative to its oil-linked contracts.

Gail, which agreed to buy U.S. liquefied natural gas starting in four years, is offering to resell it at a fixed premium over the price at Henry Hub, the Louisiana clearinghouse and North American benchmark, Marketing Director Prabhat Singh said in an interview. Asia’s LNG contracts traditionally are tied to oil, making them vulnerable to spikes in crude prices.

“Henry Hub is the cheapest gas, and the price we are offering is getting good response among Indian customers,” Singh said by phone on June 4. “We have already signed term sheets with over 100 potential customers.”

Natural gas for July delivery settled yesterday at $4.701 per million British thermal units on the New York Mercantile Exchange. Singh declined to disclose the premiums over the U.S. benchmark that Indian clients would pay, saying only that they will be fixed for five years. MORE