India spreads its net for gas, any gas

Posted in India | 22-Feb-06 | Author: Siddharth Srivastava| Source: Asia Times

The proposed TAPI gas pipeline.
The proposed TAPI gas pipeline.
NEW DELHI - While efforts are under way to seal nuclear deals with the US and France to generate electricity, India's efforts to tie up gas resources as another alternative to fossil fuels have gathered momentum.

Following the decision by Myanmar to supply gas to China, India is now making swift maneuvers to ensure that the US$1 billion Myanmar-Bangladesh-India (MBI) gas pipeline materializes. And significantly, India has virtually decided to join the US-backed Turkmenistan-Afghanistan-Pakistan (TAP) pipeline, in part because of the geopolitical difficulties involved in the $7 billion Iran-Pakistan-India (IPI) pipeline that Washington opposes.

Paradoxically, New Delhi has found an uncommon ally in Islamabad, which is pushing for India's involvement in the TAP as well as the IPI.

Gas on TAP
This month, Delhi for the first time took part as an observer in a meeting of the steering committee of the TAP project. Now it appears ready to sign on as a participant in the Washington-backed $3.5 billion gas pipeline as an alternative to the IPI.

Prime Minister Manmohan Singh had discussed the IPI proposal with Petroleum Minister Murli Deora and his Pakistani counterpart, Amanullah Khan Jadoon. Jadoon reiterated Islamabad's commitment to the IPI, despite US misgivings, and at the same time extended support for India's bid to join the TAP.

While India, Pakistan and Iran go through the motions of pursuing the IPI project, apparently unaffected by the International Atomic Energy Agency's referral of Tehran to the UN Security Council, most observers claim that the prospects of the pipeline materializing are now remote. Despite domestic political pressures, India has so far sided with Western powers against Tehran pursuing an independent nuclear program.

In this context, India was an observer at the recent TAP meeting in the Turkmen capital Ashgabat. Dinsha Patel, minister of state for petroleum and natural gas, led the Indian delegation and expressed willingness to join the TAP. A memorandum of understanding (MoU) was signed at the conclusion of the two-day meeting, under which Turkmenistan will supply 3.2 billion cubic feet gas per day to Pakistan for a period of 30 years.

India is closely studying the project's geopolitical, financial and technical aspects. Afghanistan and Pakistan have been seeking India's participation as vital for the TAP's viability.

"We have 90 days to get necessary official approvals to join the project. Once approved by the cabinet, the project will be renamed TAPI," for Turkmenistan-Afghanistan-Pakistan-India pipeline, Deora said in a statement. According to reports, the Oil Ministry will now seek government approval for joining the project within the next three months.

New Delhi, it seems, is satisfied with the availability of gas resources as well as the viability of the project, which has the backing of the Asian Development Bank. The TAP would stretch from the Turkmenistan-Afghanistan border in southeastern Turkmenistan to Multan, Pakistan (1,270 kilometers), with a 640km extension to India.

Importantly, TAP does not involve Iran or the US, which means none of the geopolitical problems involving the IPI. The TAP not only provides a southern exit route for land-locked Central Asian gas that will not have to cross Iran or Russia, it is also an important cog in Washington's Afghan rehabilitation plan as it will earn substantial transit fees.

Turkmen Oil, Gas and Natural Resource Minister Gurbanmyrat Ataev said that Ashkhabad considered TAP to be a priority gas export route. "This market is attractive first of all because of its closeness and rapid growth in consumption and secondly because Turkmenistan, as a neutral state, can in fact help strengthen regional cooperation and increase the economic prosperity of the people in the region."

With potential hydrocarbon reserves of over 45.44 billion tonnes of oil equivalent, Turkmenistan can significantly increase supplies to the international market.

Siddharth Srivastava is WSN Editor India.
Siddharth Srivastava is WSN Editor India.
Mired in Myanmar

Irked by the delays in implementing the Myanmar-Bangladesh-India pipeline, Myanmar recently inked an MoU with PetroChina to supply 6.5 trillion cubic feet (tcf) of gas from Block A of the Shwe gasfields in the Bay of Bengal for over 30 years.

The decision came as a major blow to India's bid to tap gas from its eastern front. It also marked one more victory for Beijing energy giants, which have consistently been beating Indian energy firms in the acquisition of oil and gas reserves around the world. India's state-owned oil giant Oil and Natural Gas Corp (ONGC) has lost to Chinese companies, in Kazakhstan, Ecuador and Angola.

Now, with Block A-1 gas going to China, the cost of the MBI will increase as the available block close to Bangladesh is A-2, which will require an additional 150km of pipeline for the gas to reach India.

This has provoked India to appoint Brussels-based Suz Tractebel as technical consultants to study a different route for the pipeline through the northeast, bypassing Bangladesh. The European infrastructure consultants appointed by the Gas Authority of India (GAIL) have been briefed to "carry out a study for preparing a detailed feasibility report, an environment management plan and a rapid risk analysis study via the northeast Indian territory", the Ministry of Petroleum announced.

GAIL is also exploring the idea of transporting gas from Myanmar via the sea. According to reports, GAIL is planning to invite bids for a long-term chartering service of ships or barges for the purpose.

These moves come a year after India, Myanmar and Bangladesh signed a trilateral pact to collaborate on the MBI project, which is also aimed at helping Bangladesh carry gas from its surplus regions to deficit areas.

The demand for compressed natural gas (CNG) and liquefied natural gas continues to grow in India, with over 300 CNG stations and over 300,000 vehicles running on CNG. The delay in Bangladesh firming up the agreement saw a worried Yangon, which is keen to exploit the financial viability of its new gas finds, acceding to China's demands for gas supplies after persistently urging India to tie up alternative plans, including setting up power projects near the gasfields.

Myanmar is concerned that India will be unable to evacuate gas once the reserves are certified by a third party agency and are made available for commercial production. India's ONGC and GAIL, along with two South Korean companies, Korea Gas and Daewoo, have agreed to jointly develop the block. But there is no agreement on evacuation, with both India and China at an equal distance from the gas blocks.

Though Bangladesh stands to earn substantial transit fees of $125 million per year, it has set conditions that include creation of corridors through India to carry out trade with other neighbors, such as Nepal and Bhutan, as well as steps to reduce its $2.5 billion trade deficit with India. Clearly, New Delhi has made up its mind to bypass Dhaka, even though the cost of the pipeline stands to increase substantially.

For the past year, New Delhi and Yangon have been exploring independent alternatives for importing gas. Bangladesh was not invited to the third meeting on the project. New Delhi has talked of the possibility of constructing the pipeline from Myanmar into Mizoram and onwards to Assam (both in northeast India) and culminating in West Bengal. The shortest pipeline route is from Myanmar to Bengal through Bangladesh, while the alternative land route would be twice the distance.

Thus, given the economic advantages as well as higher feasibility, India opened another window for negotiations with Bangladesh. Former foreign minister Natwar Singh visited Dhaka in August last and said that the tri-nation project would not proceed without the involvement of Bangladesh.

Last month, former petroleum minister Mani Shanker Aiyer visited Beijing. India and China signed a slew of MoUs on energy cooperation, including between ONGC Videsh Ltd, India's flagship firm for overseas oil and gasfield acquisitions, and China National Petroleum Corporation (CNPC). In the first instance of Sino-Indian cooperation, India and China won a joint bid in December last to buy PetroCanada's 37% stake in Syrian oilfields for $573 million.

However, most observers believe that any cooperation in future can only be on a case-by-case basis, with the Myanmar-China deal demonstrating that when it comes to energy security, nations will go it alone if they can.

Siddharth Srivastava is a New Delhi-based journalist.

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