India-mynmar gas pipeline

India-Myanmar Gas pipeline Through Bangladesh-Pipe Dream?



For a long time now it is known in the subcontinent that gas is an economic source of energy, which is environment friendly too. It is also known that pipeline is the best mode to carry this gas from the vast gas fields that have been discovered in the region and neighbouring territories in recent times. But, still some countries are not only reluctant to export their surplus gas reserves but also hesitant to allow even the gas pipeline to pass through their territory. Bangladesh is a case in point. By linking the gas pipe line transit to many other issues, Bangladesh has in effect complicated the issue.

India needs huge amount of gas to meet its ever growing energy demands. It produces about 90 million standard cubic meters of natural gas per day as against its daily demand of 120 million standard cubic meters that is likely to go further in the coming years.

The projected demand of natural gas in India by 2020 stands at a staggering 400 million standard cubic meters a day. Though some of this demand will be met domestically, still a large gap would remain.

Recently, there has been a change in Indian approach towards meeting its energy needs. The effort is to shift its focus from striking crude oil to natural gas. This change in strategy has necessitated greater dependence on gas to meet India’s energy needs.

The rising demand has to be met both by increasing domestic production and importing gas India is making efforts on both the fronts. While domestic production has its limitations in spite of new gas fields in Arunachal Pradesh and Assam, the other option of obtaining gas from neighbouring countries appears to be the only way to meet the increasing energy needs.

Gas from Myanmar
In recent times, there has been huge finds of gas reserves in Myanmar. South Korea's Daewoo International operates and owns 60 per cent of Myanmar's gas-rich A-1 block, in which India's Oil and Natural Gas Corp. Ltd. holds 20 per cent stake, while GAIL India Ltd and Korea Gas Corp each hold 10 per cent. Daewoo's 100 per cent-owned A-3 block is close to A-1, which could hold 6.0 trillion cubic feet of recoverable gas. GAIL (India) Ltd has been appointed by Myanmar as the agency responsible for marketing the gas from A1 block.

India has its own gas reserves in Tripura, which has not been properly exploited due to absence of local market. The pipeline is one of the several options being considered by India for exploiting the gas reserves.

Gas Pipe line through Bangladesh:

India has been pushing for an early agreement on the Myanmar-Bangladesh-India gas pipeline proposal as there is almost no chance for it to get gas from Bangladesh, due to strong domestic opposition within the country. The project, to be shared between India, Myanmar and a Bangladeshi company, Mohona Holdings, anticipates exporting natural gas from Myanmar to India, with natural gas from Tripura also being fed into the pipeline. The proposed pipeline would run through Arakan (Rakhine) state in Myanmar, then via the Indian states of Mizoram and Tripura before crossing Bangladesh to Kolkata. India would build the $1-billion 290-km gas trunkline while Bangladesh’s state-owned Gas Transmission Company would have responsibility for managing the stretch in its territory.

But the issue of gas pipeline is quite complex, given its trans-national nature. Initially Bangladesh was not even willing to consider this proposal. But things have changed to some extent after the 12th SAARC summit. India and Pakistan are now talking cooperation. In a situation like this it would be difficult for Bangladesh to continue with its recalcitrant approach. After all, Bangladesh is the country which had first mooted SAARC and for this it is going to receive an award during the forthcoming 13th SAARC summit.

Though this change in situation has resulted in Dhaka now agreeing in principle to allow the construction of pipeline, it has also put certain conditions. It wants the pipeline to be laid along its existing roads and highways, and the project jointly managed by India and Bangladesh. It also wants India to agree to allow Bangladesh to use the pipeline to export its gas to India or import it from Myanmar.

Benefits to Bangladesh:

Bangladesh stands to benefit in a number of ways by the construction of this pipeline. A recent cabinet committee brief prepared by its energy ministry underscored the pipeline's benefits to the country. These include: revenue earning from granting a right of way to the pipeline; an estimated 100 million US dollars per annum, wheeling charges over the gas transmission through Bangladesh; an investment of about 150 million dollars inside Bangladesh for the pipeline construction; and involvement in the project of the Gas Transmission Company Limited (GTCL), which may earn the company 24 million dollars per year. These advantages are coming to Bangladesh even when it is not investing in the pipeline nor assuming any risk involved in its construction.

State Minister for Energy and Mineral Resources AKM Mosharraf Hossain believes that Myanmar's initiative to export gas to India through a pipeline would also ensure future energy security of Bangladesh. In the event of exhaustion of Bangladesh's gas resources the country would be able to import gas from Myanmar from its huge natural gas reserves. It may also pave the way for investment in the country's energy sector, and will lead to massive industrialization in the country.

The tri-national gas pipeline is being pursued in Bangladesh by the Mohona Holdings since 1996. Recently, this company reiterated its interest, and following a discussion with state minister for energy, the Bangladesh prime minister verbally directed the energy ministry to send the proposal to the cabinet committee. But the cabinet committee on economic affairs decided that the matter should now be taken up at the highest level, that is, by Prime Minister Khaleda Zia’s office, as it looks after energy issues.

Bangladesh puts forth conditions:

During the recent visit of Bangladesh Finance and Planning Minister Saifur Rahman to India the issue of gas pipeline figured prominently. Rahman who was in New Delhi to attend the India Economic Summit, had talks with the Indian Prime Minister and other ministers on the issue of transit facilities and development of tri-nation gas pipeline through Bangladesh.

Bangladesh refused outright permission of road transit but agreed to consider the issue of rail transit. Regarding pipeline, Saifur wanted all the Bangladesh-India problems to be discussed with the aim of a package deal. Taking cue from New Delhi’s demand for transit routes through Pakistan and Iran, Bangladesh has said that it will consider allowing a similar pipeline originating from Myanmar provided India allows Dhaka a free trade corridor to Nepal and accompanying trade benefits. It also asked India to remove barriers that exist in trade between the two countries. A section in Bangladesh also wants India to allow purchase of cheap hydropower from Bhutan and Nepal so that the gas reserves of Bangladesh could be conserved. These new conditions have further complicated the negotiation over the laying of pipeline, as any free transnational movement through the sensitive ‘Siliguri Corridor’ may not be acceptable to India. Bangladesh is fully aware of this situation.

India’s Petroleum Minister Mani Shankar Aiyar will visit Dhaka and Yangon in January to explore the possibility of laying this pipeline. The Bangladesh energy ministry has been given a go-ahead on the pipeline issue by the foreign ministry. The issue is expected to top the agenda at the tri-nation energy ministers’ conference to be held in January 2005 in Myanmar. Here some forward movement could be expected due to the changed political situation in South Asia and also because of lead taken by the source country Myanmar in bargaining with the intermediate country, Bangladesh.

There will be serious bargaining before this pipeline comes through. India would also have to consider other related costs due to the conditions put by Bangladesh. These new conditions have made the situation trickier.

Meanwhile, the development in technology has provided India other options of transporting gas. This has considerably reduced the bargaining power of Bangladesh. But pipeline has its importance for regional cooperation. A decision to construct the pipeline would depend on all these. But if it materializes, it will start the process of regional economic cooperation in South Asia in a major way, which has so far been held hostage by the regional politics.

India will have to look for other options too for transporting gas from Myanmar in the near term as the transit country Bangladesh is unlikely to treat the issue as purely an economic one.