GAIL India Plans to Spend $1.5 bn on US Shale Asset

GAIL India plans to spend close to $1.5 billion to acquire a shale gas asset in the United States, according to Economic Times newspaper.

The moves is aimed at meeting future gas demand in India and other markets along with partly offsetting the risk associated with the market-linked pricing of 6 million tonnes of liquefied natural gas it has contracted to purchase annually from the US, the newspaper added. 

The state owned firm has not year zeroed in on any asset.

"We are searching for an asset that can produce about 3 million tonnes per annum. That will help cover the pricing risk of about 50 per cent of the LNG we have contracted to buy," an executive told Economic Times. 

The state owned company has signed a 20 year sales and purchase agreement with Sabine Pass Liquefaction LLC, a unit of Cheniere Energy Partners for supply of 3.5 million tons per year of LNG. The company also signed a terminal service agreement for 2.3 million tons per year of LNG liquefaction capacity with Dominion Cove Point LNG. Cheniere is expected to start production early 2018.