CHALLENGES OF CROSS BORDER GAS

PIPELINES IN

SOUTH ASIA

E n g r . K h o n d k a r A b d u s S a l e q u e

( P e n g & F I E B )

Introduction

Opportunities, Prospects and

Challenges

IPI, TAPI, TRI-Nation Pipeline

Suggestions and

Recommendations

4/3

/20

13

2

En

gr. S

ale

qu

e

CHALLENGES OF CROSS BORDER GAS PIPELINES

Introduction

4/3

/20

13

3

En

gr. S

ale

qu

e

…MAP OF SOUTH ASIA 4

/3/2

013

4

En

gr. S

ale

qu

e

CROSS BORDER PIPELINES

Now most of the political debates are directed

towards ensuring the availability and security of

supply of energy.

The countries are caught in the grip with the

raising energy demand and prices

The energy crisis and debate over energy security

and sustainability are concentrated on two

issues:

The high dependence on energy import and the

increasing need for diversification of the energy

sources

4/3

/20

13

5

En

gr. S

ale

qu

e

FUEL CHOICE

The current debate is all about the geopolitics of

supply of the natural gas, as leading energy

source and the pillar of the energy stability in the

continent.

The energy crisis in most of the south Asian

countries emanates from arranging the required

fuel and fuel diversification

Limited oil reserve /resource , emissions creating

cimate change related impacts creates challenges

coal and liquid fuel use.

Natural Gas is relatively environment friendly

4/3

/20

13

6

En

gr. S

ale

qu

e

RESOURCE POTENTIAL

Bangladesh ,India , Pakistan and Afghanistan

has some proven reserve and significant

potential untapped natural gas

Next Door neighbors countries Myanmar and

Central Asian Countries [ Turkmenistan , Iran ]

have huge surplus which can feed the South

Asian Countries for several years

Talks and plans for IPI, TAPI , Myanmar-

Bangladesh –India Pipelines are going on for

almost one and a half decade

4/3

/20

13

7

En

gr. S

ale

qu

e

TOP TEN NATURAL GAS PRODUCTING

COUNTRIES

Countries % of Total Resrve

Russia 18.0

Iran 11.1

Turkmenistan 8.73

Qatar 8.50

USA 3.00

KSA 2.73

Azerbaijan 2.02

Venezuela 1.84

Nigeria 1.75

Algeria 1.37

4/3

/20

13

8

En

gr. S

ale

qu

e

GAS RESERVE OF SOUTH ASIAN

COUNTRIES

Ranking Countries Reserve of

World %

1 India 0.57

2 Pakistan 0.44

3 Myanmar 0.15

4 Bangladesh 0.10%

5 Afghanistan 0.03

4/3

/20

13

9

En

gr. S

ale

qu

e

Opportunities,

Prospects &

Challenges

4/3

/20

13

10

En

gr. S

ale

qu

e

PROSPECTS OF GAS TRADING

Gas imports from Central Asia [TAPI],

Iran [IPI], and Myanmar [Myanmar to

India Pipeline Across Bangladesh]

Cross Border Gas Pipelines from Gas rich

neighbors can create long term energy

security for energy starved south Asian

Countries

Could replace Oil and Coal and reduce

emissions

4/3

/20

13

11

En

gr. S

ale

qu

e

IPI PIPELINE… 4

/3/2

013

12

En

gr. S

ale

qu

e

…IPI PIPELINES…

Conceptualized in 1950s by a Pakistani civil engineer and conceived by Indian and Iranians in 1989, preliminary agreement was signed in

1995 between Iran and Pakistan

1999 between India and Iran

2775 KM [1724 Miles] 56” OD Trans-border Gas Transmission Pipeline .

Design Capacity : 4 BCM

Discharge : 1 Tcf per annum

National Iranian Oil Company, Sui Northern Gas Pipeline Companies, Sui Southern Gas Company, GAZPROM

4/3

/20

13

13

En

gr. S

ale

qu

e

…IPI CHALLENGES…

USA asked Pakistan to abandon the

pipeline project : January 2010

Iran and Pakistan signed an agreement

on the pipeline : March 2010

Each country agreed to complete its

section by 2014.

In July 2011, Iran completed construction

of its section

4/3

/20

13

14

En

gr. S

ale

qu

e

…IPI CHALLENGES…

Pakistan proposed that the government

might have to impose a tax on consumers,

or seek government-to-government

arrangements with Iran, China and

Russia to build the pipeline

On 15 April 2012 Saudi Arabia offered to

deliver an "alternative package" to

Pakistan if the country abandoned its

cooperation with Iran.

In addition to oil the package would also

include a cash loan and oil facility

4/3

/20

13

15

En

gr. S

ale

qu

e

…IPI CHALLENGES…

On 1 May 2012, Pakistan's Foreign

Minister, Hina Rabbani Khar said,

Pakistan will complete the huge pipeline

project "at any cost" and that the project

was in line with the country's national

interest.

On 4 September 2012, the project was

announced to commence before October

2012 and be completed by December 2014

4/3

/20

13

16

En

gr. S

ale

qu

e

…IPI MILESTONES…

Conceived: Pakistani civil engineer

Malik Aftab Ahmed Khan in mid 1950s

Conceptualized: Rajendra K. Pachauri

in partnership with Ali Shams Ardekani,

former Deputy Foreign Minister of Iran in

1989

Preliminary agreement signed between

Pakistan & Iran : 1995.

Preliminary agreement between Iran and

India was signed: 1999

4/3

/20

13

17

En

gr. S

ale

qu

e

…IPI MILESTONES…

In 2004 the project revived after the

UNDP report Peace and Prosperity

Gas Pipelines by Gulfaraz Ahmed

was published in December 2003

In February 2007, India and

Pakistan agreed to pay Iran US$4.93

per million British thermal units

(US$4.67/GJ)

4/3

/20

13

18

En

gr. S

ale

qu

e

IPI MILESTONES…

In April 2008, Iran expressed interest in

the People's Republic of China’s

participation in the project.

In August 2010, Iran invited Bangladesh

to join the project

In 2009, India withdrew from the project

over pricing and security issues, and after

signing a civilian nuclear deal with the

United States in 2008

4/3

/20

13

19

En

gr. S

ale

qu

e

TAPI PIPELINES… 4

/3/2

013

20

En

gr. S

ale

qu

e

Osman Yulatin

South Gas Field

Fazilka

Turkmenistan Afghanistan Pakistan & India Gas Pipeline

Project (TAPI)

21

TAPI NATURAL GAS PIPELINE

• 1,735 km [1078 miles] pipeline linking Turkmenistan, Afghanistan, Pakistan and India (TAPI)

• An energy bridge to link gas resources of Turkmenistan with the energy starved sub-continent

• Open access TAPI Pipeline will transport 33 billion cubic metres per of natural gas per year

• Expected to boost the economies of all the four countries

22

…TAPI PIPELINES…

A Gas Pipeline Framework Agreement,

signed by representatives of the four

participating nations on April 25, 2008 in

Islamabad, envisaged construction to start in

2010, supplying gas by 2015.

1,000-mile route from Central to South Asia -

Turkmenistan (Dauletabad) – Afghanistan

(Heart, Helmand – Kandahar) – Pakistan

(Quetta and Multan) – India (Fazilka).

ADB on the basis of its study reported that the

estimated capital cost was $7.6 billion and it

would consider financing the project

4/3

/20

13

23

En

gr. S

ale

qu

e

…TAPI PIPELINES

Four country framework agreement installed.

India and Pakistan signed GPSA with

Turkmenistan

Transit tariff agreement among transit countries

were under negotiation

But in efforts to attract investors for build, own

and operate the about 8 Billion dollar pipeline

the project sponsor ADB got very poor response.

4/3

/20

13

24

En

gr. S

ale

qu

e

…TAPI PIPELINES…

A Gas Pipeline Framework Agreement,

signed by representatives of the four

participating nations on April 25, 2008 in

Islamabad, envisaged construction to start in

2010, supplying gas by 2015.

The announced 1,000-mile route would

follow the ancient trading route from Central

to South Asia, extending from the

Dauletabad gas field in Turkmenistan along

the highway through Herat, Helmand and

Kandahar in Afghanistan, to Quetta and

Multan in Pakistan, and on to Fazilka in

India.

4/3

/20

13

25

En

gr. S

ale

qu

e

…TAPI PIPELINES…

Participating countries have held many

high-level meetings during the past eight

years, with Asian Development Bank

(ADB) sponsorship and multilateral

support

The ADB completed a feasibility study in

2005 that was updated in 2008

The ADB reported that the estimated

capital cost was $7.6 billion, and said it

would consider financing for the project.

4/3

/20

13

26

En

gr. S

ale

qu

e

…TAPI MILESTONE…

Turkmenistan promised independent

certification of the gas available for the

pipeline

Plan for the line to be built and operated

by a consortium of national oil companies

from the four countries

Special-purpose financial vehicle would be

floated, and international companies

would likely to join in laying and

operating the pipelines.

4/3

/20

13

27

En

gr. S

ale

qu

e

…TAPI MILESTONE

Four country framework agreement installed.

India and Pakistan signed GPSA with

Turkmenistan

Transit tariff agreement among transit countries

were under negotiation

But in efforts to attract investors for build, own

and operate the about 8 Billion dollar pipeline

the project sponsor ADB got very poor response.

4/3

/20

13

28

En

gr. S

ale

qu

e

MYANMAR –BANGLADESH –INDIA

PIPELINE

Bangladeshi Private Sector Initiative Mohona

Holdings Ltd conceived the Myanmar –India

pipeline across Bangladesh Tri Nation Gas

Pipeline in early 1900s

The initiative advanced almost to take off stage

in early 2005 when Energy Ministers of three

countries after a summit meeting at Yangoon

agreed on principle to go ahead with it .

This pipeline if built would have a capacity of

transporting 1 BCF of gas from Gas Fields in

Myanmar across Bangladesh to Indian Eastern

states by 2009

4/3

/20

13

29

En

gr. S

ale

qu

e

TRI NATION PIPELINE

The representatives of three countries comprising

Technical and Financial experts met at Yangoon

for a two day extensive brain storming in

February 2005

A draft MOU was initialed agreeing on the route

and nature of the pipeline

MOU also included proposal for further techno

economic feasibility study for the open access

pipeline permitting injecting and siphoning off

gas along pipeline route.

4/3

/20

13

30

En

gr. S

ale

qu

e

TRI NATION PIPELINE

MOU included the following unresolved bilateral issues between Bangladesh and India: Possibility of Bangladesh accessing to

Hydropower of Nepal and Bhutan across India

India guaranteeing unhindered trading corridor among Bangladesh , India and Nepal across the Chicken neck

India removing tariff and non tariff barriers to Bangladesh export commodity to Indian market

It was agreed to advance resolution of the these bilateral issues side by side to Tri Nation Pipeline discussion

4/3

/20

13

31

En

gr. S

ale

qu

e

TRI NATION PIPELINE

India was hesitant in buying gas at 4 US$ /

MMBTU

Protracted discussions between Bangladesh and

India without any concrete result.

China offered better deal to Myanmar and

finalized agreement for import of gas at

attractive price

It is an example of lost opportunity for S, Asia

resulting in:

India buying LNG at US$14 /MMBTU from Qatar

and Other sources

B’desh gas crisis prolonged, as it has opportunity

loss of about 500 MMCFD

4/3

/20

13

32

En

gr. S

ale

qu

e

ROADBLOCKS IN TRANSBORDER

ENERGY TRADE Geopolitics

Bilateral political irritants – Border disputes,

Water sharing issues, etc.

Lack of political will and commitment

Insurgency and security concerns

Absence of effective independent regulatory

institutions for creating level play ground for

private and public sector companies.

Lack of effective public –private partnership.

Corruption and political interference

4/3

/20

13

33

En

gr. S

ale

qu

e

Suggestions &

Recommendations

4/3

/20

13

34

En

gr. S

ale

qu

e

CHALLENGES OF CROSS BORDER

PIPELINES

Geopolitics

Security Concerns

Absence of Functional Independent Regulatory

Infrastructure

Poor Governance and Weak State Owned

Enterprises

Poor Pricing of gas and energy

Lack of faith among nations for several irritants

Resources constraints for investing in Multi

Billion Dollar Project

Weak PPP mechanism

4/3

/20

13

35

En

gr. S

ale

qu

e

THANK YOU