Undersea line from Iran to port Cheap Gas

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A 1300 km undersea pipeline from Iran, avoiding Pakistani waters, has been proposed to port cheap gas. It is said that this pipeline can bring natural gas from the Persian Gulf to India at rates less than the price of LNG available in the spot market.

Key facts:

  • As per the proposal, the pipeline can first travel to Oman, and then onwards to Porbandar in the state of Gujarat.
  • The pipeline is planned to carry 31.5 million standard cubic meters gas per day and will be built in two years from the date of necessary approvals and a gas sale and purchase agreement (GSPA) being signed.
  • The subsea pipeline is being seen as an alternative to the on-land, Iran-Pakistan-India pipeline. New Delhi has not been participating in talks on the 1,036-km Iran-Pakistan-India gas pipeline since 2007 citing security and commercial concerns. But, it has never officially pulled out of the dollar 7.6 billion project.

 

Benefits of the proposed pipeline:

Presently, liquefied natural gas, or LNG, imported through ships costs about dollar 7.50 per million British thermal unit. However, natural gas imported through the proposed dollar 4-billion line would cost dollar 5-5.50 per million British thermal unit at the Indian coast, cheaper than the rate at which some of the domestic fields supply gas. Therefore, the cost of landed gas through an undersea pipeline will be at least dollar 2 cheaper than importing LNG, saving about dollar 1 billion annually.

 

About Iran- Pakistan- India (IPI) gas pipeline:

IPI pipeline was envisaged to transport natural gas from South Pars gas field of Iran to Pakistan and India with a carrying capacity of 60 million standard cubic meters per day, to be equally split between India and Pakistan. The total length of the pipeline up to Indian border (near Barmer) was about 2,135 km (1,100 kms within Iran and the rest within the territory of Pakistan). As per past estimates, investments required for this pipeline were in excess of $7 billion.