The deal calls for Houston's United LNG to supply a minimum of 4 million tons of LNG a year to India's Petronet for 20 years via the Main Pass Energy Hub in the Gulf of Mexico.
It is Petronet's first U.S LNG supply off take agreement.
Qatar's RasGas has been India's sole long-term supplier of natural gas, with two contracts for a total of 360 billion cubic feet, the U.S. Energy Information Administration says.
"As both a reliable and low cost LNG supplier, the USA is now the world's prime target to secure LNG, and this agreement with United is another big step forward to meeting India's growing demand for clean energy," Petronet LNG Managing Director and Chief Executive A.K. Balyan said in a release.
India's demand for energy is growing at an annual rate of 5-6 percent, the government says. India is the world's sixth largest liquefied natural gas importer.
While the Main Pass facility received approval in January from the U.S. Department of Energy to export gas to any country that has or subsequently enters into a free trade agreement with the United States, approval for exports to non-free trade countries is pending. India doesn't have an agreement with the United States.
The $14 billion LNG project, developed by United LNG and Freeport McMoRan Energy, hasn't been commissioned, The Hindu reports.
"This is a very preliminary agreement," Petronet finance director, R.K. Garg told Platts, stressing that only after United LNG gets U.S. Energy Department approval for LNG exports to non-FTA countries can a binding agreement be signed.
"If the approval is in place to sign the binding agreement by the end of this year, then we hope supplies to start by 2018," he said.
Opponents of U.S. natural gas exports have maintained that more imports would lead to higher natural gas prices in the United States.
Indian Ambassador to the United States Nirupama Rao, in an editorial in The Wall Street Journal this month, said the prospect of increased Indian investment in the U.S. natural gas market "will usher in a new era for a strong and mutually rewarding India-U.S. energy partnership."
Boosting LNG exports, she said, would help create thousands of jobs in the United States and an expanded revenue stream for the federal government.
"For India, it would provide a steady, reliable supply of clean energy that will help reduce our crude oil imports from the Middle East and provide reliable energy to a greater share of our population," Rao wrote.
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