Gas pipeline to China: India to talk to Russia for extension

Written by Siddhartha P Saikia | Huma Siddiqui | Updated: Jun 24 2014, 08:05am hrs
India is set to start negotiating with Russia the extension of a $30-billion gas pipeline Moscow plans to build to China till the Indian border. If the proposed pipeline from Russia via China's Xinjiang province materialises, it will be among the world's most expensive gas pipelines.

Sources said given Narendra Modi governments intent to bolster sourcing of oil and gas to meet the countrys rising energy demand, an Indian delegation would take up discussions on the proposed pipelines extension with Moscow and Beijing during the BRIC summit in July.

The proposal would also be in focus when Russian President Vladimir Putin visits India later this year.

India is a large importer of energy in FY14, its net energy imports were 6.3% of the GDP. Without energy imports, we calculate it would have run a current account surplus of 4.6% of the GDP, the Goldman Sachs said in a recent report.

India is also working on the $9-billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline.

During the World Petroleum Congress held in Moscow last week, petroleum minister Dharmendra Pradhan is learnt to have discussed the possibility of the pipeline with his Russian counterpart, Alexander Novak. India is looking to set up a pipeline from Russia either through China or the same route as TAPI.

Recently, Russia and China signed a 30-year gas contact worth $400 billion. GAIL (India) has already tied up 2.5 million tonne of liquefied natural gas (LNG) from Russia; the supply will commence from 2020. OVL managing director SP Garg said India is surrounded by countries rich in oil and gas. Russia is one such country, which has surplus oil and gas. It will be a very good idea to build a pipeline from Russia to India, Garg said.

Goldman Sachs said energy imports can be reduced further by switching from oil to natural gas and improving conservation.

Reforms in the energy sector could reduce Indias annual energy import bill by $40 billion by FY23. Energy imports in a reform scenario could come down to about 4% of the GDP, from 6.3% currently, it said.