India to Go Undersea for Gas Transit?
|Apr 17, 2012|
With India’s demand for gas expected to burgeon, the country is looking for new options overseas to plug the gaps – possibly through an undersea pipeline from Qatar that would get Delhi out of US gunsights over the import of Iranian gas.
Sources in India’s oil ministry have told Asia Sentinel that diplomatic efforts are now underway to implement the undersea project from Qatar via Oman and across the Arabian Sea to Maharashtra or Gujarat.
Plans have long been stalled for a US$7.5 billion Iran-Pakistan-India pipeline by the threat of United States and European Union sanctions as western governments seek to thwart suspected Iranian plans to acquire nuclear weapons. Driven by US and more recently EU demands, India has been seeking ways to cut down on energy imports from Iran and to build on relationships with Saudi Arabia as well as other parts of the Middle East and Africa. New Delhi’s other efforts to procure natural gas via pipelines from Iran, Myanmar or Turkmenistan are also stuck due to multiple reasons related to security, transit fees, competition from China and strategic factors. New Delhi has considered turning to Israel for gas supplies as well.
The country is faced with an energy quandary. Despite its rapid decade-plus of economic advancement, some 404 million of its 1.2 billion people are without power. It produces only about half the natural gas it needs.
New Delhi is making quiet moves to push projects to tap other rich Middle East hydrocarbon resources and is also pushing for the implementation of a Turkmenistan-Afghanistan-Pakistan-India pipeline project, known as TAPI. The offshore project would circumvent the need for an above-ground pipeline that would traverse Afghanistan and Pakistan, with attendant security and transit issues.
The sources say New Delhi has already floated the idea with the Turkmenistan government in Ashkhabad during the ongoing pipeline talks, including the possibility of transferring the Turkmen gas via Iran in future if US and EU diplomatic pressure abates.
India’s state-owned gas transport utility GAIL meanwhile has been deputized to deal with South Asia Gas Enterprise Pvt. Ltd (SAGE), which is assessing the feasibility of the 2,000-km Middle East deep-sea gas pipeline. The project is expected to cost US$10-15 billion.
Oil ministry sources say GAIL has built an extensive database from deepwater pipeline specialists on undersea ventures. “Earlier there were issues related to technology. However, with the latest developments the projects seem possible. Thus we have renewed dealing with players who could implement the project,” said a ministry official who did not want to be named.
SAGE is a private sector joint venture between the Siddhomal group and UK-based Deep Water Technology Co. The venture seeks to implement inter-continental pipeline projects independent of state-to-state dealings. One primary focus is a Middle-East natural gas gathering system linking to the Arabian Peninsula in South Asia.
SAGE is reportedly also dealing with the National Iranian Gas Export Company for gas transport via a sea route that would bypass Pakistan and Afghanistan. “Linking the Middle East gas fields with India across the Arabian Sea for an offshore distance of 1300 kilometers and maximum water depth of 3400 meters, the SAGE gas transmission pipeline is designed to transport up to 1.1BSCFD gas into the Indian energy markets, or 8TCF over the next 20 years,’’ the SAGE-India website says.
The US-backed US$7.6 billion, 1700 km TAPI gas pipeline is making progress, though Afghanistan could opt out of the project.
Ahead of talks in Kabul this week, the Indian financial daily Economic Times has reported that natural gas from Turkmenistan would be delivered to India at US$10 per mmBtu, including US$3 per mmBtu as transportation and transit fee.
This would make it cheaper than the price of imported LNG, which costs US$14-16 per mmBtu. In previous talks, India has pushed for the landed TAPI gas price to be less than cost of LNG to make the project viable.
The Economic Times has quoted a government official attending the Asia Gas Partnership Summit in New Delhi last month as saying: “we have arrived at an understanding with Turkmenistan over its gas price. A GSPA will be signed only after it is approved by competent authorities of the two countries.”
Earlier this year, the additional secretary in India’s oil ministry Sudhir Bhargava told Asia Sentinel: “The transit fee should be reasonable. For this it is important that the three nations (Pakistan, Afghanistan and India) put up a joint front in our discussions with Turkmenistan to ensure that the price of landed gas in India from the proposed pipeline remains below the imported LNG costs. Otherwise the project will not be feasible.”
The TAPI pipeline is proposed to run from Turkmenistan's Yoloten Osman gas field to Afghanistan (Heart, Kandahar), Pakistan (Quetta, Multan) to India (Fazilka, Punjab).
Turkmenistan holds the fourth largest gas reserves in the world, including the Yoloten-Osman Gas field with an estimated potential to deliver 13 trillion cubic meters of gas.
A total of 90 million standard cubic meters a day (mscmd) of gas is to be supplied via the TAPI pipeline. India is expected to receive 38 mscmd, Pakistan an equal amount, while the rest will go to Afghanistan.
However, in a setback, Pakistan’s petroleum secretary Ejaz Chaudhary told reporters last month that Kabul has decided to opt out of purchasing the TAPI gas although it will allow transit to earn revenues. Ejaz also said that Russian major Gazprom has expressed an interest in the construction of TAPI.
Kabul’s position is due to a mix of factors relating to security, price and recent differences with America over security matters. In such a scenario, Afghanistan’s gas share would be distributed between India and Pakistan, the two main markets. In January this year, India and Pakistan agreed on a uniform transit fee to transfer natural gas from Turkmenistan.
Indeed, even as the TAPI negotiations enter the final phase, the biggest hurdle remains security. Given recent tenuous relations between Kabul and Washington and threats from the Taliban, the TAPI pipeline has some way to traverse.
(Siddharth Srivastava is a New Delhi-based journalist. He can be reached at email@example.com.)