Pakistan, India to discuss construction of LNG pipeline

Delhi plans to extend its gas pipeline to Wagah border.

Islamabad and Delhi are expected to discuss a plan to lay a pipeline from India to Pakistan for export of liquefied natural gas (LNG) in a meeting to be held in Islamabad in the first week of September.

According to sources, Pakistan and India, during the deliberations, will also touch issues of LNG pricing and transport facility. They said India was planning to expand its pipeline network for shipment of LNG across the border.

The sources pointed out that India had already laid a pipeline network covering 100kms for transporting LNG to Bhatinda, from where the pipeline could be extended to Pakistan’s Wagah border to inject gas into the network of Sui Northern Gas Pipelines Limited (SNGPL).

Indian LNG trading company, Petronet Private Limited (PPL), 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 is meeting 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. India may also link the price of gas for Pakistan with Japan’s price.

PPL has a long-term contract with RasGas, Qatar for 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 supply of 1.44mtpa.

India also has an oil refinery in Bhatinda from where it desires to export oil to Pakistan as well. In this regard, Delhi has expressed interest in building a pipeline to Wagah for supply of oil to Pakistan.

An energy expert said Pakistan would have to use the option of pipeline if it wanted to import LNG from India. However, he suggested that Pakistan should first try to find out whether India was in a position to export gas in the face of shortages there.

“India currently faces shortage of over four billion cubic feet of gas per day (bcfd), which poses a question mark over whether it will be able to provide gas to Pakistan,” he said, adding there were some other questions which needed to be answered before going for LNG imports from India.

“The proposed import of 200 million cubic feet per day (mmcfd) of LNG may be a short-term arrangement,” he said, adding the quality of pipeline would need to be examined to find out how long it would be able to channel the gas if a long-term contract was reached between the two countries.

He pointed out that India was importing 75% of LNG in a long-term arrangement with Qatar and 30% of the requirement was being met through spot purchases.

“Pakistan may cost $3 to $4 per million British thermal units (mmbtu) in terms of terminal toll, profit and transportation of LNG through the pipeline,” he said, adding, however, the cost of LNG ranged between $13 and $18 per mmbtu in India.

Discussing gas wastage in the country, the expert said “efficiency of gas appliances in Pakistan is 30% to 35%, prompting the need for the government to focus on using most efficient appliances,” he said.

Published in The Express Tribune, August 26^th, 2012.