India may provide LNG to Pakistan under favourable terms
As a major confidence building move, India has said it will follow the gas pricing formula that is to be implemented in fuel imports through the Iran-Pakistan (IP) gas pipeline project for the LNG it earlier offered to export to Pakistan.
“Pakistan had linked gas price to 78% parity of crude oil with some discounts under the Iran-Pakistan (IP) gas import project. Now India wants to link the price of LNG it exports to Pakistan with the price of Brent crude, along a pattern similar to the IP gas pipeline project,” sources revealed; adding that an Indian team is scheduled to reach Islamabad on Thursday (today) to break ground on the LNG pricing issue.
India had offered to export 200 million cubic feet per day (mmcfd) of LNG to Pakistan, transported through its territory to the Wagah border via a pipeline.
Sources said that during a meeting held in the first week of September, the two sides had discussed the pricing formula of LNG that was to be imported by Pakistan, and had considered whether it should be linked to the prices of furnace oil or crude oil.
“We will now decide the price during upcoming talks between Islamabad and New Delhi,” a source said; adding that India had been demanding a higher price – up to $18-20 per Million British Thermal Unit, but Pakistan wanted a more reasonable price in order to move ahead on the project.
Furthermore, the price quoted by India does not include transportation charges for the fuel, which will be supplied through a 60 kilometre (km) pipeline from Bhatinda to the Wagha border. The Pakistani government will need to lay a 30km pipeline to inject gas into the Sui Northern Gas Pipeline network.
“LNG import from India is the most viable option at the moment, as there will be no capital cost involved and supply can start within months of a final deal,” a senior government official claimed; adding that if the government imports LNG through Karachi, the cost of just laying a pipeline from Karachi to Lahore will be $1.4 billion.
An energy expert, however, said that India currently faces a shortage of over four billion cubic feet of gas per day, which poses questions over whether it will be able to provide the promised gas to Pakistan. He also said that the proposed import of 200 mmcfd of LNG may be a short-term arrangement and India would also want to ink long-term supply contract to lay gas pipeline.
The Indian LNG trading company Petronet Private Limited has an LNG receiving and re-gasification terminal at Dahej, Gujarat, with original handling capacity of five million tons per annum (mtpa). The capacity of the terminal, which meets around 20% of the country’s gas demand, was expanded to 10mtpa in June 2009. The LNG price for the Dahej project is linked with Japan’s crude cocktail price.
PPL has a long-term contract with RasGas, Qatar, for the supply of 7.5mtpa of LNG, with back-to-back sales arrangement with GAIL India, Indian Oil Corporation and Bharat Petroleum. It has also made arrangements with Exxon Mobil’s Gorgon venture in Australia for the supply of 1.44mtpa.
An oil refinery is also located in Bhatinda, from where the LNG supply line will originate. India also desires to export oil to Pakistan in the future from this refinery, and has proposed building a separate pipeline in this regard.
Published in The Express Tribune, October 25th, 2012.
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We should stop this Non-sense with " Oil from India" Stupidity. Those Pakistani Ruling Elite who came through Corrupt undemocratic Accord with foreign Powers , are dancing on foreign Set Agenda with doing OIL & GAS import from India. Iran is next door and it has all we need. Stop this artificial stupidity. We should not do this transaction at all. Where is the sense in this all that a country (India) who imports most of its Oil from Gulf we have to go and buy oil from it instead of the 4th largest Producer of Oil i.e. Iran. It's time Zardari & Party should pack up. First Hindu Regime must Stop terrorism in Balochistan and Karachi and should withdraw thousands of Hindu terrorists wandering streets of Karachi. Until then, there should be no Business with Hindu Regime.
Rather than building separate pipelines for gas and petrol, Pakistan and India should look into the way some of the hydrocarbon pipelines are managed in southern Europe. For instance, there is pipeline from Portugal to Spain which carries gas, crude oil and vegetable oil all in the same pipeline. Since all these hydrocarbon have different densities so they don't mix. As a result, first a batch of gas is pumped then crude oil, than again gas and than vegetable oil. As a result, same pipeline carries various materials at the same time like a freight train. This is all managed by the pumping stations at both ends of the pipeline.
'cost of just laying a pipeline from Karachi to Lahore will be $1.4 billion' Not True, a gas pipeline already exits between Lahore and Karachi.