NIOC to conduct feasibility study

Jyoti Mukul

New Delhi, April 11: THE National Iranian Oil Company (NIOC) has hired an international consultant for conducting a joint feasibility study on the viable route for the Indo-Iran gas pipeline project.

According to top official sources, Gas Authority of India Limited (Gail) is likely to reach an agreement with the state-owned Iranian company for being part of this study, which will explore the cost and security implications of the three options — onland, deep water and the LNG route — available for bringing natural gas to India.
A team of Gail and petroleum ministry officials are in Iran to discuss this amongst other issues. Significantly, the visit of these officials coincides with the visit of Prime Minister Atal Behari Vajpayee to Iran.

Official sources revealed that Gail’s participation in the $3.5-billion liquefied natural gas (LNG) project in Iran is also likely to come up for discussion.

NIOC had earlier offered Gail a marginal 2 per cent to 5 per cent equity participation in an LNG liquidification project in South Pars Field of Iran.

In order to develop this LNG project, NIOC has already signed a preliminary agreement with Reliance Petroleum and British Petroleum.

The public sector oil navaratna, Indian Oil Corporation (IOC), has also evinced interest in picking up equity in the project. However, the fourth partner is yet to be decided.

LNG from this project would be exported to India, while gas for the liquefaction plant will be sourced from blocks in Iran’s South Pars field.

Sources revealed that besides the equity alliance in the LNG project, Gail is also looking at forging a marketing tie-up with NIOC for selling LNG in Indian market.

Significantly, Gail and NIOC had few years back conducted another study for shallow water pipeline but at that time Pakistan had refused to allow a pipeline through its waters.

Iran has the world’s second largest gas reserves but has no exports. NIOC has, therefore, decided to set up this 7.5 million tonne per year LNG plant in Iran in partnership with Indian and other foreign companies for exports to India.

According to rough estimates made by the Iranian company, about $3 billion will be required for building the 2,700 km onland gas pipeline out of which one option is that Iran, Pakistan and India share a $1 billion
each.

However, it has been informally communicated to India that if it decides to go in for the offshore pipeline route, it will have to bear the entire cost of building this pipeline, estimated at $3.6 billion.

However, Iran may fund around $800 million for the portion of pipeline which will pass through its territory.
Sources said that in contrast to the Indo-Iran gas pipeline project, the LNG project is seen as a politically more viable alternative.