India to sign pact next week on TAPI gas pipeline
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India will sign next week an agreement to buy natural gas from Turkmenistan through a pipeline passing through Afghanistan and Pakistan which the US had been backing as an alternative to Iran-Pakistan-India line.
The Union Cabinet this evening gave approval to state-owned gas utility GAIL India signing a Gas Sale and Purchase Agreement (GSPA) with TurrnenGas, Turkmenistan's national oil company, on May 23/24 for buying gas through the USD 7.6-billion Turkmenistan-Afghanistan-Pakistan-India pipeline, a top official said.
The 1,680-km pipeline from Turkeministan's South Yolotan field, now renamed as Galkynysh, will run to Herat and Kandahar province of Afghanistan, before entering Pakistan. In Pakistan, it will reach Multan via Quetta before ending at Fazilka (Punjab) in India.
The pipeline would carry 90 million standard cubic meters per day of gas, of which 14 mmscmd would be bought by Afghanistan. India and Pakistan would get 38 mmscmd each.
New Delhi had inked agreements for the IPI, which is shorter in length and passes through less difficult and dangerous terrains, some years back but it had been put on the backburner as US opposed to any energy deal with Iran for its alleged nuclear weapons programme.
The official said Asian Development Bank (ADB) would be appointed adviser for the project, which would be built by a consortium of international companies including GAIL.
India will pay for the gas only when it is delivered to it at its border, he said adding Afghanistan and Pakistan would sign host country agreements to provide security to the pipeline. In exchange, they would get USD 0.50 per million British thermal unit as transit fee from India.
The official said the international consortium building the pipeline would take insurance cover against any disruption of supplies and damage to the pipeline.
India would pay a price linked to fuel oil for the Turkmenistan natural gas. "The price in 2017, when the first gas is expected to flow, would be cheaper than the landed price of LNG that India buys from Qatar on a long-term contract," he said.
RasGas of Qatar sells liquefied natural gas (LNG) in ships at 12.67 per cent of the Japan Customs-cleared Crude (JCC) -- the average price of customs-cleared crude oil imports into Japan.
At USD 100 a barrel crude price, the LNG at the time of loading in Qatar would cost USD 12.67 per mmBtu. To this shipping charge of USD 0.26 per mmBtu would be added, customs or import duty of 5 per cent (USD 0.64) and regasification charge of USD 0.65 per mmBtu, to give a delivered price of USD 14.22 per mmBtu.
"Turkeministan gas would be about USD 2 less than this price at the Indian border," he said.
Negotiations on the ADB-backed TAPI projects started in 2002 and the Cabinet approved of India's participation in the project on May 18, 2006. On December 7, 2010, the Cabinet approved signing of Inter-Governmental Agreement and Gas Pipeline Framework Agreement. And today, it approved signing of the GSPA.
Besides the fuel oil-linked price, India would pay USD 0.50 per mmBtu in transit fee each to Afghanistan and Pakistan for allowing passage of the gas line through their territory.
On top of this, a transportation charge for wheeling of natural gas through the 1,680-km long pipeline, which is likely to be operational by 2017, would be paid to the consortium that builds the line.
"After adding all these charges, the price of gas on Indian border should be about USD 12 per mmBtu," he said.
