June 30, 2011 / 6:16 AM / 9 years ago

UPDATE 1-India's Petronet eyes U.S. LNG supplies, plans new plant

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NEW DELHI, June 30 (Reuters) - India’s Petronet is talking to Cheniere Energy and Freeport for liquefied natural gas (LNG) supplies, Chief Executive A. K. Balyan said on Thursday, as the U.S. companies progress towards exports.

Balyan added that a new LNG terminal, which Petronet plans for the east coast of India, would have capacity of up to five million tonnes a year.

“We are in discussions with several major producers and we are keeping this option open now that whatever LNG we contract ... for the future can be brought in at any of our terminals” Balyan told reporters at an event.

India is the world’s eighth-largest importer of LNG and Petronet, partly owned by state-run firms GAIL , Indian Oil Corp and refiner Bharat Petroleum , is the major buyer.

U.S. companies are looking to export to major importers for the first time in over forty years as the country’s shale gas deposits give it flexibility for overseas sales.

Cheniere received approval to export natural gas to such buyers in May but still needs a licence to be granted.

Petronet already has a 10 million tonnes per year terminal at Dahej in western Gujarat state and plans another at Kochi in the south west.

It currently gets 7.5 million tonnes of LNG per year from Qatar for Dahej and has a deal for 1.5 million tonnes per year from Australia’s Gorgon project from 2014 for the Kochi plant.

Petronet recently agreed an initial pact with Russia’s Gazprom to annually buy 2.5 million tonnes of LNG.

India needs gas to help power its electricity generation, fertiliser sector, city gas distribution and for industries and needs LNG imports as domestic production struggles to keep pace with demand.

“India’s current gas-demand scenario reveals that there is a wide gap between demand and supply and the same is set to widen in the coming years,” G. C. Chaturvedi, Petronet’s chairman, said in a speech on Thursday.

He said India’s current gas demand is around 179 million cubic metres a day (mmcmd), while local supplies are less than 140 mcmd.

Reporting by Nidhi Verma; Writing by Jo Winterbottom; Editing by Aradhana Aravindan

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