Iran’s Gas Cheapest Energy Supply for India

A04810411.jpgTEHRAN (FNA)- Turkmenistan seeks a price for the gas to be sold to India via TAPI pipeline three times higher than Iran’s price of gas via the Iran-Pakistani, India (IPI) pipeline.

Turkmenistan reportedly wants to charge $400-$450 per thousand cubic meters ($12.5 per million British thermal unit, MBTU) for the gas from its Dauletabad fields it wants to sell to India through Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline.

After adding transportation costs and transit fee payable to Afghanistan and Pakistan, the price of imported gas for India through TAIP will be close to $18 per MBTU compared to $5.56 per MBTU for the gas it can import from the rival Iran-Pakistan-India (IPI) pipeline.

New Delhi has made a counter proposal of $200-$230 per thousand cubic meters, Press Trust of India (PTI) quoted an unnamed Turkmen oil ministry official as saying.

Meanwhile, Turkmenistan warned that it may choose the competing export projects to Russia, China and the European Union if TAIP project is not concluded on time.

Gas producers argue cleaner energy source, natural gas, should have 16 percent higher price than the prevailing oil price.

Based on that argument, a former Iranian deputy oil minister, Mohammad Hadi Nejad Hossenian, has voiced concerns that the agreed price of exported gas to India might be too low and in case of implementation of IPI project Iran would suffer a heavy loss.

He said the price formula agreed between the two countries is two or three times lower than the current international gas price.

Turkmenistan has agreed to sell 50 billion meter gas to Iran and Russia and 40 billion to China.

Iran needs gas from Turkmenistan or from other northern neighbors to supply energy for its northern provinces which are far away from the national grid.

Iran and Pakistan have initiated a Gas Sales Purchase Agreement. India and Pakistan have also resolved all bilateral issues including transit fee which saw New Delhi boycotting IPI pipeline talks for about a year.

India has more or less agreed to give Pakistan a transit fee of $200 million per year, which is equivalent to $0.60 per million British thermal unit for allowing passage of the pipeline through that country.

India and Pakistan finally agreed in February 2007 to pay Iran $4.93 per million British thermal units ($4.67/GJ) but some details relating to price adjustment remained open to further negotiation. There was a breakthrough in the talks in April 2008 when Iranian President Mahmoud Ahmadinejad visited Pakistan and India.

According to the project proposal, the pipeline will begin from Iran’s Assalouyeh Energy Zone in the south and stretch over 1,100 km through Iran. In Pakistan, it will pass through Baluchistan and Sindh but officials now say the route may be changed if China agrees to the project.

The gas will be supplied from the South Pars field. The initial capacity of the pipeline will be 22 billion cubic meter of natural gas per annum, which is expected to be later raised to 55 billion cubic meter. It is expected to cost $7.4 billion.

According to Indian ministry sources, the IPI gas pipeline is quite crucial for New Delhi as after signing of the agreement, 60 million standard cubic meters per day (mmscmd) of gas is expected to be supplied in phase-I, which will be shared equally between India and Pakistan.

In phase-II, 90 mmscmd of gas will be supplied to India and Pakistan. So far six meetings of the trilateral joint working group (JWG) of the participating countries have been held with the last meeting being held in New Delhi on June 28-29, 2007.

India, Asia’s third-largest economy, can produce only half the gas it needs to generate electricity, causing blackouts and curbing economic growth. Demand may more than double to 400 million cubic meters a day by 2025 if the economy grows at the projected rate of 7 to 8 percent a year, according to the Indian oil ministry.

Iran plans to start exporting gas to Pakistan in 2011. Iran has completed half the pipeline, which can carry 110 million cubic meters of gas a day, National Iranian Gas Company (NIOC) said in April. India uses about 108 million cubic meters of gas a day, according to a BP Plc report.

Check Also

Hamas attempts to ignite Judea and Samaria
Updated November 22, 2023

Since October 7, 2023, when the war in the Gaza Strip began, Hamas has been …