The country’s largest gas transportation company GAIL (India) has signed a terminal service agreement with Dominion, a US-based firm, to add 2.3 mmtpa of gas capacity to Cove Point LNG liquefaction terminal project.

The US-based firm is marketing 4.6 mmtpa, out of which GAIL has booked 50% of such capacity for the period of 20 years.

This will provide GAIL with an outlet for the gas assets it holds in the US as LNG from Cove point could be exported to nearby markets and also brought to India with necessary permissions.

At present, US laws don’t allow export of gas from any terminal apart from Cheniere. GAIL is hopeful that the laws will be relaxed in the future and gas would be brought to India, an official said.

India is facing severe scarcity of gas as the fuel from its most prolific KG D6 block has dipped to all-time low levels. New sources of gas would help the fuel starved power sector to ramp up generation.

With domestic demand for gas burgeoning, GAIL is gearing up to meet it. GAIL earlier signed an agreement with Cheniere in 2011 to bring gas to India.

BC Tripathi, chairman and managing director of GAIL, said, ?GAIL has a positive outlook on Henry Hub indexed LNG exports from the US and that has prompted us to sign this terminal service agreement which follows our deal with Cheniere signed in 2011. The contracts signed with Cheniere and Dominion make GAIL one of the the largest Henry Hub LNG portfolio holders and provide us an opportunity to market about 6.0 mmtpa of LNG from the US.?

Dominion would be setting up the liquefaction facilities in the premises of its existing 11.7 mmtpa regasification terminal.

Construction work is expected to start in 2014 so as to put the facilities into service in 2017.

Under the agreement, GAIL will procure its own natural gas and deliver it to the cove point pipeline for liquefaction at the

terminal and loading into ships brought to the facility on the Chesapeake Bay.

The deal will also provide GAIL with an opportunity to trade part of the volume in the international market, apart from organising the ships required to transport the rest of the volume to India,? Tripathi said in a statement.

Dominion is one of the largest producers and transporters of energy in the US with a portfolio of approximately 27,500 megawatts of generation and 11,000 miles of natural gas transmission with presence in 15 countries.