NEW DELHI (Reuters) - India’s top gas importer Petronet LNG (PLNG.NS) and U.S. liquefied natural gas (LNG) developer Tellurian Inc (TELL.O) are preparing to sign a $2.5 billion deal during President Donald Trump’s maiden visit to New Delhi later this month, two sources familiar with the matter said.
India and the United States have built close political and security ties and want to strengthen trade links, with Trump aiming to boost energy supplies to India, the world’s third biggest oil importer.
Petronet will invest the money over a five-year period in Tellurian’s proposed $27.5 billion Driftwood LNG export project in Louisiana and the deal will give Petronet an equity stake in the project and rights for up to 5 million tonnes a year of LNG, the sources said.
“Supplies will begin from 2024 and will be gradually raised to 5 million tonnes a year in 2028,” one of the sources said.
The delivered price of gas to India would be below $6 per million British thermal units (mmBtu), the source added. This will work out to about 30% cheaper than the country’s current long-term deals with Qatar.
“India will be getting the producer-based prices unlike other deals where Indian companies are only one of the customers,” the source said, declining to be named.
Tellurian is offering an equity interest in Driftwood Holdings, which comprises Tellurian’s upstream company, its pipeline and the upcoming terminal that will be able to export 27.6 million tonnes of LNG a year.
Tellurian did not respond to Reuters email seeking comment. Petronet was not available for comment.
The two companies signed a preliminary non-binding deal in September last year, when Prime Minister Narendra Modi visited the United States as the two nations want to deepen their energy and trade relations.
India wants to raise the share of gas in its energy mix to 15% by 2030 from the current 6.2% as it battles high levels of pollution in many big cities, including the capital New Delhi.
The South Asian country is expanding its pipeline network and building new LNG import terminals to encourage the use of cleaner fuel.
In a bid to make gas more affordable, it has asked its biggest gas supplier Qatar to change the pricing under its long term oil-linked gas supply contracts as spot Asian LNG prices have tumbled.
Reporting by Nidhi Verma; Editing by Christian Schmollinger and Richard Pullin