New Delhi, Sept. 2: India plans to export liquefied natural gas (LNG) to Pakistan by the end of this year and is likely to finalise the tariff this month.
Islamabad initially plans to import 200 million cubic feet per day (mcfd) gas, which can be enhanced to 500mcfd as trade ties between the neighbours deepen.
Sources said officials from GAIL (India) Ltd held talks with Pakistan’s Inter State Gas Systems Private Ltd on the tariff. The two sides agreed on the broad contours of arriving at a price for the gas and plan to talk later this month to finalise the deal.
Sources said GAIL had offered to supply the fuel at $18-$20 per million British thermal unit (mmBtu), excluding transportation charges.
State-owned gas transporter GAIL will lay a 60km pipeline from Bhatinda in Punjab to the Wagha border, and the Pakistani government will build a 30km pipeline to Lahore.
GAIL plans to import LNG at the Dahej or Hazira terminals in Gujarat and move the gas through the Dahej-Vijaipur-Dadri-Bawana-Nangal-Bhatinda pipeline to Punjab and then to Pakistan. LNG is natural gas that has been liquefied at sub-zero temperature and shipped in cryogenic vessels.
Pakistan is likely to experience a severe gas crisis in 2016 when shortfall is expected to hit 3.021 billion cubic feet per day (bcfd), a report by the State Bank of Pakistan has said.
Buying gas from GAIL makes economic sense for the South Asian neighbour as it does not have an LNG import terminal.
Gas supply in Pakistan at around 5.497bcfd in the current year till June is short of demand by 2.458bcfd. Supplies, according to the State Bank of Pakistan, are likely to increase to 6.354bcfd in 2015-16 but the deficit will expand further to 3.021bcfd.
Meanwhile, GAIL has signed a second LNG import deal with Gas Natural Fenosa (GNF) of Spain last week to meet the growing energy demand in India.
Under the agreement, GNF shall supply about 3 billion cubic metres of LNG over the next three years. The supply shall begin in January.
Earlier, GAIL had entered into a medium-term supply agreement with GDF Suez for sourcing 0.8 million tonnes of LNG from 2013 to 2014.
The agreement will help to meet the nation’s growing gas demand, which is expected to grow to 220 billion cubic metres in 2020 from 58 billion cubic metres in 2012, representing a compounded annual growth rate of over 18 per cent.
GAIL has been expanding its global presence to secure supplies. It had signed a 20-year sales and purchase agreement with Sabine Pass Liquefaction LLC, a unit of Cheniere EnergyPartners of the US, for supply of 3.5 million tonnes per year of LNG beginning 2017.
It has also inked a purchase agreement with Turkmengaz of Turkmenistan for buying 38 million standard cubic metres per day (mmscmd) of gas for 30 years that will be supplied through the Turkmenistan-Afgha-nistan-Pakistan-India pipe-line.
GAIL operates a 9,500km pipeline network and can handle 175mmscmd of gas.
India’s gas demand widened because of the fall in output from Reliance Industries’ D6 block in the Krishna-Godavari basin off the Andhra Pradesh coast.
The production, which was estimated at 70mmscmd of gas has fallen below 34mmscmd. Next year, the output is likely to come down to around 27 mmscmd.