Global Energy Ventures (ASX: GEV) has shored up essential gas supplies for its compressed natural gas project after negotiating a heads of agreement (HoA) with the National Iranian Gas Company.
The HoA allows for the parties to work towards a binding agreement which will lock-in 20-years of guaranteed gas supplies for Global Energy Ventures’ compressed natural gas project.
Under the agreement, Global Energy Ventures will take charge of about 240 million cubic feet per day of natural gas from National Iranian Gas Company. The gas company will also set the purchase fee based on the Iranian Government’s gas export pricing formula.
Global Energy Ventures maintains the price it pays for the gas will be “internationally competitive”.
“The HoA with National Iranian Gas Company is the all-important first step in securing gas supply for our proposed compressed natural gas project for marine transport of compressed natural gas to the Indian market,” Global Energy Ventures chairman and chief executive officer Maurice Brand said.
Preliminary discussions between the National Iranian Gas Company and Global Energy Ventures have led to agreed gas specifications, delivery points, take or pay levels and delivery pressures.
This enables Global Energy Ventures to move forward with port design and safety studies.
As part of its compressed natural gas project, Global Energy Ventures will install compression and berthing facilities at the Port of Chabahar in Iran. Once the facilities have been installed, Global Energy Ventures will load the compressed natural gas onto its fleet of six ships to deliver around 1.5 million tonnes per annum of liquified natural gas to India’s west coast.
To infiltrate the Indian market, Global Energy Ventures claims it is in “advanced negotiations” with a potential Indian offtake partner, which will be made public once the final terms have been completed.
Mr Brand said Global Energy Ventures plans to ramp up its exports to India to about 5mtpa of liquified natural gas.
The National Iranian Gas Company is constructing a connecting gas pipeline that will direct natural gas to the Chabahar port. The is due to be completed in 2019.
Shares in Global Energy Ventures were up more than 2% in early morning trade to A$0.385.