GAIL (India) Ltd, is studying a proposal for investing Rs700 crore in an 890- kilometre long pipeline from a gas field off Myanmar coast to China, B C Tripathi, chairman and managing director of GAIL, said yesterday.
''We have received a proposal from South Korean companies (Daewoo International Corp and Korea Gas ) for joining the project. We are examining the prospects,'' Tripathi told reporters after the company's AGM.
The pipeline may cost $1.5 billion, of which GAIL's investment works out to be about Rs700 crore.
Daewoo International holds 51 per cent operating interest in the two offshore Myanmar blocks - A1 and A3, the gas from which will be sold to China ad India.
Korea Gas Corp (8.5 per cent), GAIL (8.5 per cent) and ONGC Videsh Ltd (17 per cent), and Myanmar Oil & Gas Enterprise (15 per cent) are the other stakeholders.
The in-place reserves from the A-1 block have been assessed by Houston-based consulting firm Ryder Scott at 2.88 trillion cubic feet to 3.56 trillion cubic feet.
Gas supply from the blocks is expected to start in the first half of 2013, with initial output from the first phase pegged at 10 million standard cubic metres a day (mmscmd).
"Finally it will be ramped up to 16 mmscmd," Tripathi said.
If GAIL decides to participate in the pipeline project, it may like to go through with its joint venture with China Gas, the GAIL director (finance), R K Goel, said.
"We have already taken approval from the Myanmar government and the existing consortium to permit our alliance to associate in the joint venture," Goel said.
According to studies, China's current natural gas consumption is twice that of India. While natural gas forms 8 per cent of India's commercial energy supply, it is only 3 per cent in China, which wishes to raise it to 10 per cent. China's projected gas demand will, therefore, outstrip that of India.
It has an operating terminal at Guangdong and is building another four along its eastern seaboard. Other than Myanmar, China has also signed an LNG contract with Qatar and another with the French company, Total to ensure uninterrupted gas supply.
India too plans a gas pipeline from Myanmar. However, Bangladesh, through which the gas pipeline was earlier conceived, and India are locked in some boundary disputes.
The tri-nation pipeline project was initiated by a Bangladeshi private company, the Mohona Holdings Limited way back in 1997. The pipeline was to run through Arakan State in Myanmar and the Indian states of Mizoram and Tripura before crossing Bangladesh to reach India's West Bengal capital Kolkata.
The governments of India and Myanmar approved the Mohona proposal for the cross-border pipeline. But Bangladesh did not approve it.
The laying of this 900-km tri-nation pipeline was agreed to in principle by the energy ministers of the three countries in Yangon in January 2005.
If the pipeline is constructed through Bangladesh, its length would be 900 km long. On the other hand, if it is laid through the Northeast bypassing Bangladesh, the pipeline will have to cover an additional 500 km.
Last November, tbe North-Eastern states have asked the petroleum ministry to route the proposed gas pipeline from Myanmar to India through the region, excluding Bangladesh.
GAIL has also favoured routing the pipeline through Mizoram, Assam, Bihar and West Bengal.
According to the revised plan, the trunk pipeline for importing gas from Myanmar will be connected to the proposed Jagdishpur-Haldia gas pipeline at Gaya in Bihar after passing through Aizwal, Guwahati, Jalpaiguri and Siliguri.
The pipeline will also have the provision to transport gas from developing gas fields in Tripura and Assam. However, the union government has not yet reached a final agreement on the line.