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Russia eyes gas pipeline deal with India

June 18, 2014 13:14 IST

MoscowAfter it warmed up to China with a $400-billion gas deal, Russia is likely to have India as the next stop for expansion of its hydrocarbon market.

During his scheduled India visit towards the end of the year, Russian President Vladimir Putin is likely to discuss plans to build a gas pipeline to the country via China.

Petroleum Minister Dharmendra Pradhan and Russian counterpart Alexander Novak met this week on the sidelines of the World Petroleum Conference in Moscow.

The pipeline, either through Pakistan or China, came up for discussions between the two countries’ delegations.

India and Russia also have long-term liquefied natural gas supply and gas-swap deals on the table if the pipeline does not work out.

If the $30-billion pipeline from Russia via China’s Xinjiang province materialises, it will be among the world’s most expensive gas pipelines.

The proposed $9-billion Turkmenistan-Afghanistan-Pakistan-India pipeline is struggling to find a consortium leader.

Road shows in Singapore, New York and London did not convince global energy firms to take on the role due to Turkmenistan’s decision not to give them stakes in its oil & gas fields.

“Exxon, which the TAPI consortium wanted to rope in, is not keen because of terrorism in the region. With Russia, we are planning to take forward the pipeline project.

“The route might either be through Afghanistan and Pakistan or China.

“There will be more clarity during Putin’s India visit likely by the year-end,” hinted a person privy to the development who did not wish to be named.

There might well be a ‘Plan B’ for long-term LNG imports or gas-swap deals between the two countries, as Russia is keen on diversifying its energy supplies to China and India.

During former prime minister Manmohan Singh’s visit to Moscow last October, India and Russia had agreed to set up a joint group to look into the possibility of overland transportation of hydrocarbons.

India’s crude oil imports from Russia stand at around half a million tonnes a year.

State-owned ONGC, which has an interest in the Sakhalin oilfields, has shown interest in the project. Recently, Russia and China signed a 30-year deal for Gazprom to deliver Russian gas to China. “It is going to be a physical challenge to bring a pipeline from China to India through the Himalayas, so a route via China is impractical.

On the other hand, any pipeline through Central Asia is a challenge because it has to cross Afghanistan and Pakistan.

The possibility of LNG imports or swap deals would be more viable for India,” said Debasish Mishra, senior director, Deloitte India.

WARMING UP

New markets: Improving of relations with India and China might top President Vladimir Putin’s agenda, as Russia looks for new markets for its hydrocarbon products

Piping plans: India and Russia have discussed taking forward the plans for a pipeline either via Pakistan or China, following the chances of a cost escalation in the proposed TAPI project

Pricey deals: According to reports, if the $30-billion pipeline from Russia through China’s Xinjiang province works out, it will be among the world’s most expensive pipeline projects

Wider possibilities: Both countries are also looking at possibilities for long-term LNG import and gas-swap deals

Image: A view of Moscow's Kremlin, Ministry of Foreign Affairs and Moscow City business district. Photograph: Reuters

Shine Jacob in New Delhi
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