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India, Russia Discuss US$25 Billion Gas Pipeline

India and Russia are studying the construction of a gas pipeline to transport Russian gas from Siberia to India, over 2,800-3,700 miles. The value of this giant infrastructure project is estimated at up to US$25 billion. A memorandum of understanding was signed by state company Engineers India Ltd. and Gazprom on Saturday.

The length of the pipeline would vary depending on the route that will be chosen, should the two nations agree to go ahead with the project. If the partners choose the route through the Himalayas and into northern India, it will be the shortest one.

The two other alternatives are building it through Central Asia, Iran and Pakistan, to western India, or – the longest route – through China and Myanmar. It’s the longest route that has been estimated to cost the US$25 billion.

There is, however, an alternative to a Russia-India pipeline, and this is a project for the transportation of Iranian gas via Pakistan into India. This pipeline has been estimated to cost less than the one from Russia, and it’s likely that Iran will do its best to convince India that its pipeline is the better choice. On the other hand, given long-standing tensions between India and Pakistan, the former may be less willing to depend on gas-carrying infrastructure that passes through the latter.

According to Engineers India, the transportation costs of the Russian gas will be US$12 per million British thermal units, although other industry experts mention US$4 per mmBtu as a more realistic cost.

This compares with less than US$1 per mmBtu for the Iran-Pakistan-India pipeline and US$2 per mmBtu for another pipeline that is already in development: the Turkmenistan-Afghanistan-Pakistan-India pipeline, funded by the Asian Development Bank. TAPI will carry 33 billion cubic meters of natural gas from Turkmenistan to Afghanistan, Pakistan and India.

The news about another major Russian-Indian project comes days after Rosneft announced it has teamed up with global commodities trader Trafigura and an investment fund, UCP, to acquire 98 percent of India’s Essar Oil.

By Irina Slav for Oilprice.com

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