(Adds dropped word to headline)
* To issue tender to swap U.S. LNG in two months
* Sold 0.5 mln T/yr U.S. LNG to local customer
* India to lift 10 pct less LNG under long-term deal withQatar
By Nidhi Verma and Oleg Vukmanovic
NEW DELHI/LONDON, May 27 (Reuters) - GAIL (India) Ltd has sold some of its liquefied natural gas (LNG) fromthe U.S. portfolio to European energy major Royal Dutch Shell ahead of production from early 2018, its head B.C.Tripathi said on Wednesday.
GAIL has a deal to buy 3.5 million tonnes per annum (mtpa)of LNG for 20 years from U.S.-based Cheniere Energy andhas also booked capacity for another 2.3 mtpa at DominionEnergy's Cove Point liquefaction plant.
Tripathi refused to elaborate on the volumes, pricing andduration of the deal with Shell but a trade source said GAIL hassold at least 0.5 mtpa LNG to Shell.
GAIL would also issue an LNG swap tender in two months tocut transport costs for supplies to India, he said, adding 0.5million tonnes of its U.S. LNG has already been booked by localclients while talks were ongoing with domestic and foreign firmsfor more such deals.
GAIL was keen to swap about 2 mtpa of its LNG, Tripathi hadsaid in January 2014.
India's gas demand is set to rise as the federal governmenthas approved policies to boost power and fertiliser productionusing imported gas.
Gas demand in the world's second most populous nationhowever declined in the quarter ending in April as alternativefuel like furnace oil turned cheaper due to rout in global oilmarkets.
Also prices of gas sourced under a long-term deal with Qatarhave turned costly tapering the demand for the cleaner fuel.
He said India has used a 10 percent reduction permissibleunder a 25-year contract with Qatar's RasGas to import up to 7.5mtpa the super cooled fuel.
This is the first time India has exercised its right to liftless volumes since the start of contract in 2004.
GAIL has rights to sell about 60 percent of the gas volumessourced under the long-term deal with Qatar. (Reporting by Nidhi Verma, editing by David Evans)
