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Six Years Later, Cheniere and India's Gail Kick Off 20-Year LNG Agreement

More than six years after signing a 20-year sales and purchase agreement (SPA) for liquefied natural gas (LNG) supplies, Cheniere Energy Inc. and India's state-owned natural gas utility, Gail (India) Ltd., officially kicked off their SPA on Monday, with a ship expected to depart Cheniere's export terminal in Louisiana by day's end.

In a joint statement, the companies said a ship was to depart Cheniere's Sabine Pass facility in Cameron Parish, LA, after a ceremony with officials from both companies. Gail Global (USA) LNG LLC, a U.S. affiliate, agreed to purchase 3.5 million metric tons per year (mmty) of LNG from Cheniere in December 2011, when it signed the SPA.

"The commencement of this agreement marks the start of a long and productive relationship between Cheniere and Gail," said Cheniere CEO Jack Fusco. "India remains an important market for LNG, and one that we hope will continue to show signs of growth."

Gail Chairman B.C. Tripathi added that with the SPA, "Gail will have a diversified portfolio both on price indexation and geographical locations. This long term agreement [will] go a long way in strengthening the relationship between Gail and Cheniere and reinforcing India-U.S. trade ties."

Last December, India's minister for oil and natural gas said Gail has been trying to renegotiate separate LNG import contracts with Cheniere and Dominion, with the most recent discussions occurring last November. Dominion, which plans to export LNG to Gail through its Cove Point terminal in Maryland, called the minister's claims a mischaracterization.

LNG exports from Cove Point began last week, after Friday's departure of an LNG tanker owned by a subsidiary of Royal Dutch Shell plc.

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