India wants $12.67 per unit price to buy TAPI gas

India is not agreeable to paying the price set by Turkmenistan for natural gas from its Dauletabad gas field, as this would make it more expensive than liquefied natural gas (LNG) imports.

India is playing host to a meeting between oil ministers of Turkmenistan, Afghanistan and Pakistan, in New Delhi to negotiate the construction of a $7.6-billion transnational pipeline that would transport gas from central Asia. Though India has indicated its willingness to pay around $12.67 per unit for supplies of natural gas from Turkmenistan, the central Asian nation wants the price to be linked to the market rate of LNG.

According to government officials, market rates for the gas could be $14-15 per mBtu (million British thermal unit) while the government wants the rate at par with Petronet LNG's long-term contract with Ras Gas.  

Turkmenistan has agreed to supply 90MMSCMD gas to the three consumers of which, India and Pakistan would get around 38MMSCMD each, with the rest going to Afghanistan.

If the arrangement works out to be costlier than LNG imports, India would not invest in the 1,680km pipeline, according to officials as there was no point in investments in infrastructure, if LNG imports were to be cheaper.

The price negotiations are being conducted keeping gas supply in the next 4-5 years in mind. According to officials, India's participation in the TAPI pipeline would depend on the price at which Turkmenistan supplies gas.

The name 'TAPI' derives from Turkmenistan , Afghanistan, Pakistan and India. According to officials, Turkmenistan supplies gas to China at $7.5 per unit exclusive of transportation charges , and the rate would be reasonable for consumers in northern India, where power shortage in endemic. This rate would also increase in the next five years, the expected time to commission the transnational pipeline.

At the time of signing of agreements for the pipeline in December, former oil minister Murli Deora had called for Turkmenistan providing gas at competitive rates and the countries involved in the project sharing the risks of transporting gas through volatile regions. According to officials, Afghanistan and Pakistan would negotiate the gas price with Turkmenistan separately, as Turkmenistan wants separate terms with the three nations.