Metropolitan Gas (Metgas), an affiliate of Enron, on Saturday signed a ``heads of agreement'' with Oman LNG in Muscat in the presence of officials of Enron India and Maharashtra State Electricity Board (MSEB), which is to pick up a 30 per cent stake in the 2,184 MW power project.

The agreement defines all principal and commercial terms and the two parties would negotiate to finalise full sales and purchase agreements within 60 days, a spokesperson of Enron India told PTI

here on Sunday.

With the finalisation of LNG supply, Metgas is now all set for the December 1998 deadline for achieving financial closure for setting up LNG storage facilities near the project site to supply gas to Dabhol and other customers, the spokesperson said.

Speaking from Muscat, Enron India Managing Director Sanjay Bhatnagar said signing of the LNGagreement was a significant milestone for Enron and India as it is the first agreement to import LNG into India.

``The agreement is in schedule for financial closure for phase II of the project (1,494 MW) which is also expected by December 1998,'' Bhatnagar said.

``The price at which we have tied up for LNG supply is a positive step as it will help Dabhol maintain the tariff rate of 1.86 per unit,'' the spokesperson said, adding Enron would be the first to bring LNG to India.

``The reason for negotiating with Oman co was to get better advantage for MSEB in the prevailing market conditions,'' the spokesperson said.

Oman LNG would supply gas from gas fields in Qualhat near Sur on the East Coast of Oman.

Enron is currently negotiating with a leading LNG company for tanker/charter arrangements for bringing in gas to the West Coast of India.

Enron is also negotiating with four-five other firms including Qatar for additional volumes of LNG to meet requirements of other customers.

The LNG supplyagreement will reduce the risk of supply and is an important comfort to the lenders who are financing the project, which has been revived after being scrapped by the Shiv Sena-BJP alliance on coming to power.

Enron was able to successfully negotiate LNG supply with Oman on better terms in view of the crisis conditions in South-East Asia.

The first phase of the project is almost complete and trials are expected to begin soon.