India's gas reserves' discovery prompts review of Indo-Iran pipeline

The likelihood of finding large reserves of natural gas in the Krishna-Godavari basin in Andhra Pradesh District, as well as in the deep waters of the Andaman Islands area in the Bay of Bengal (OGJ, June 9, 2003, p. 44) has cast a long shadow on the proposed Iran-India natural gas pipeline project.

July 9, 2003

2 min read

By Shirish Nadkarni
OGJ Correspondent

MUMBAI, July 9-- The likelihood of finding large reserves of natural gas in the Krishna-Godavari basin in Andhra Pradesh District, as well as in the deep waters of the Andaman Islands area in the Bay of Bengal (OGJ, June 9, 2003, p. 44) has cast a long shadow on the proposed Iran-India natural gas pipeline project.

While the Indian government maintains that the project is on, and that a joint working committee (set up in August 2000) is looking into its various aspects, knowledgeable sources say the project eventually might be shelved.

The sources claim that the country's LNG policy is being reviewed in the light of the positive new estimates about gas reserves, following the large number of gas discoveries—the largest in the last 25 years after the giant Mumbai High (Bombay High) oil field and Vasai (Bassein) gas field discoveries in 1976 and 1977.

And even if India still chose to import LNG from Iran, it is unlikely to invest in a gas pipeline, partly because of the political implications of having a strategic natural gas pipeline running through Pakistan, in potentially hostile territory, and partly because some Indian LNG projects are already in a fairly advanced stage.

The latest demand-supply projections show that India would have sufficient gas supplies to match the expected 135-140 million standard cu m of gas per day demand in the final year of the tenth 5-year plan (2002-07). If more discoveries are made, there may even be a surplus of gas.

Under such circumstances, there may be no need to import LNG, and if India were to commit itself to 25-50 years of gas imports through a pipeline, it would not be able to opt out because of certain take-or-pay obligations in the contract.