GAIL signs MoU with Japanese company for global expansion

Public sector gas major Gas Authority of India Limited (GAIL) has roped in Sumitomo Corporation of Japan to help expand its global footprint.

B C Tripathi, chairman and managing director of GAIL (India) Limited, said the company had signed an MoU with Sumitomo to pursue business opportunities in natural gas and LNG value chain business globally, which will cover cooperation in petrochemicals, natural gas procurement, pipelines and LNG.

Tripathi said, "We are happy to enter into this strategic relationship with Sumitomo with whom we are long-term partners in Cove Point project. There are significant opportunities in the North American gas markets and we are pleased to be partnering with Sumitomo in jointly developing this business."

GAIL and Sumitomo hold half of the capacity in the Cove Point LNG Liquefaction Terminal in the US respectively, and have also agreed to coordinate for ensuring smooth operation of the terminal.

Both parties view the US market as a growth area for their line of businesses ranging from upstream to downstream.

GAIL is India's leading natural gas company with a presence along the entire hydrocarbon value chain spanning E&P, LNG, pipelines, LPG, petrochemicals, city gas distribution, among others.

In the US, GAIL has a wholly-owned subsidiary, GAIL Global (USA) Inc, which has acquired stake in Eagle Ford shale acreage. GAIL also has long-term LNG contracts with Sabine Pass and Cove Point terminal for import of 5.8 MMTPA of LNG.

Sumitomo is one of the world's leading fully-intgrated trading and investing enterprises headquartered in Tokyo, Japan.

Apart from its role as an international trader, Sumitomo is an active investor in a diverse range of businesses such as metal, mineral resources, energy, chemical, among others. Sumitomo's subsidiary, Pacific Summit Energy LLC, is a significant player in natural gas trading and marketing (physical and financial) in the US. Sumitomo has also invested in shale gas/tight oil assets in that country.

The United States, followed by Canada, leads the world in producing natural gas from shale formations. Shale gas, which has emerged as game changer in the world energy market, accounts for as much as 40 per cent of the total output of natural gas in the US.