Finally, a move towards common market in Asia
The gas sales purchase agreement for the proposed Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline was finally signed last Wednesday, a decade after the project was conceptualised in 2002 by participating countries. This marks a key milestone in the geopolitical history of the region and could prove the first step towards creation of a common energy market in Asia, a long-standing dream of many countries in the region.
?This is a major victory for India’s energy diplomacy?, said SC Tripathi, a former petroleum secretary.
The share of natural gas in India’s primary energy basket is just 10%, compared with the world average of 24%. Natural gas is much cleaner than coal as a source of energy. The government is trying to increase the share of natural gas in its energy consumption to maintain its long-term economic growth while keeping a lid on emissions. Driven by that imperative, India’s natural gas requirement is expected to grow from the current 166.2 million standard cubic meter per day to 473 mmscmd in 2017. The domestic gas sector is projected to grow at 19.5% annually over the next five years.
But India?s effort is hobbled by supply-side constraints. While domestic gas production is far short of demand, the price of imported gas (LNG) remains unaffordable for bulk gas consuming sectors like power.
India will get 38 mmscmd of gas from the Tapi pipeline. The price is estimated at $13/ mmbt, compared with the prevailing price of $ 18-19/mmbtu price for LNG.
?The successful take-off of the Tapi gas pipeline could reignite interest in similar transnational gas pipelines like connecting India with major gas producing countries like Iran, Oman and Myanmar?, said Sanjay Kaul, president, University of Petroleum and Energy Studies, Dehradun.
The piped gas from Turkmenistan will be used in northern India and it is unlikely to impact demand for imported LNG, mainly in southern India. It is because despite its higher costs, imported LNG will be competitive vis-a-vis piped gas in coastal regions.
The country’s LNG re-gassification capacity is expected to go up from 13.5 million tonnes to 48 million tonnes by 2017. Our current gas pipeline network is around 13,000 km long with a capacity of 334 mmscmd. It is projected to grow by more than double to 31,757 km by 2017 with a capacity of 876 mmscmd.
Gas availability is expected to encourage development of gas-based industries in Afghanistan and Pakistan while these countries also get the pipeline transit fee. So there is a strong probability that the Tapi pipeline would prove a catalyst for expansion of economic and trade ties between countries of the region.
The import of the development was rightly summed up by India’s petroleum minister S Jaipal Reddy while speaking at the third Turkmenistan Gas Congress at Awaza, ?For us, the signing of the GSPA is no ordinary event. While the GSPA could be construed by some as a mere contractual document, for us this particular GSPA is a triumph of multilateralism, regional cooperation and economic integration.?