State-controlled natural gas firm GAIL (India) Ltd has started discussions about buying liquefied natural gas from the proposed $44-billion Alaska LNG project, industry sources familiar with the talks told Reuters on Wednesday.
The potential deal to purchase LNG from the project is part of India’s push to buy and pledge to buy increased volumes of U.S. energy products and thus reduce its trade surplus with America and avoid steep tariffs.
The cost of supply from Alaska LNG will be the crucial factor in GAIL’s decision whether to commit to a long-term offtake deal, according to Reuters’ sources.
Energy companies are ready to commit to buying $115 billion worth of LNG from Alaska once President Trump’s pet energy project gets done, the company in charge of the project, Glenfarne, said last month, noting that as many as 50 companies have expressed formal interest.
The Alaska LNG project is designed to deliver North Slope natural gas to Alaskans and export LNG to U.S. allies across the Pacific. An 800-mile pipeline is planned to transport the gas from the production centers in the North Slope to south-central Alaska for exports. In addition, multiple gas interconnection points will ensure meeting in-state gas demand.
U.S. officials toured Asia earlier this year in search of potential Asian investors in the LNG project estimated at $44 billion. The LNG export facility is strongly supported by the Trump Administration, which has also been pressing Japan and South Korea to buy more LNG as a way to reduce America’s trade deficit with its Asian allies.
In March, Taiwan’s state-held oil and gas company CPC Corporation signed a letter of intent to invest in Alaska LNG and buy LNG from the project as part of a move to bolster its gas supply and energy security.
Despite the commitments to invest in the U.S., including in Alaska LNG, Taiwan was slapped with a 32% tariff, which will start from August 1 unless a trade deal is agreed by then.
By Charles Kennedy for Oilprice.com
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