Gail signs agreement with Japan's Chubu Electric Power

State gas utility GAIL today said it has signed a deal with Japan's Chubu Electric Power Co to jointly procure liquefied natural gas (LNG) so as to bring down rates.
"Under the MoU, GAIL and Chubu shall mainly explore possibilities for collaboration in the area of joint LNG procurement. Besides, the two companies will also seek to collaborate on shipping optimisation," GAIL said in a statement here.
India and Japan are world's biggest buyers of liquefied natural gas and are looking at jointly procuring LNG so as to cut prices for the fuel.
The two nations, who feel LNG sold to Asian countries is priced more than that supplied to consumers in Europe and the US, had in October 2012 agreed to carry out a joint study to examine ways to mitigate increasing import costs in Asia as well as to maintain stable supplies of LNG to the region.

In September last year, they agreed to work together towards the development of LNG markets that will enable effective, stable and globally competitive LNG procurement.
India, the seventh largest LNG buyer in the world, and Japan, the biggest importer of liquid gas, currently buy the gas separately. This brings to the market a hugely competing demand, pushing the prices up.

New Delhi has been pushing for LNG buyers forming a forum to better negotiate price with suppliers in the Middle East, Africa and Australia.
"Chubu and GAIL are large LNG importers having considerable synergy between their LNG business profiles.
"It is assessed that with GAIL joining hands with Chubu for jointly pursuing LNG procurement and other allied business opportunities, such a collaboration shall augment GAIL's efforts to aggressively source LNG volumes on competitive terms and would be a win-win proposition for both companies," the statement said.

GAIL said its move is in sync with its recent efforts in establishing and promoting Asia LNG Forum, a sort of Asian LNG buyers' club. GAIL is also actively working towards establishing a regional gas trading hub for Asia as well as an Asian gas index.
"This MoU with Chubu is yet another effort by GAIL towards bridging the gap in demand supply of natural gas in the Indian market.
"This is in addition to other initiatives of GAIL towards LNG sourcing, creating LNG regasification infrastructure, reserving liquefaction tolling capacity in overseas projects and augmenting transmission capacity significantly over the next few years," the statement said.

GAIL, it said, will continue to make efforts to tie-up affordable LNG in its portfolio to meet the rapidly growing energy demand of the Indian market.