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Myanmar-India gas pipeline likely to bypass Bangladesh

From The Khaleej Times, UAE
June 30, 2005
link to this article.

The much-hyped overland gas pipeline from Myanmar to India might bypass Bangladesh to safeguard what is being described by senior government officials as "India's strategic interests".

A Gas Authority of India (Gail) official disclosed yesterday that federal authorities are seriously considering a proposal to redesign the gas pipeline so that it runs entirely through Indian territory skipping Bangladesh altogether.

According to the new scheme, the pipeline will enter India through the northeast. In January, it was announced that the pipeline would run through Arakan (Rakhine) state in Myanmar and the Indian states of Mizoram and Tripura before crossing Bangladesh to reach the West Bengal capital, Kolkata.

Apparently, New Delhi is wary of the pipeline running through a third country - Bangladesh. It is also being argued that the realigned pipeline would boost India's domestic gas exploration projects in the neglected northeast. But the real reason for the proposed realignment is Bangladesh's insistence on a free trade corridor to Nepal as the price for allowing the pipeline to run through its territory.

Dhaka is also demanding removal of existing trade barriers between India and Bangladesh. Moreover, Dhaka is also bargaining hard for India's permission to buy cheap hydropower from Bhutan and Nepal so that its own gas reserves of Bangladesh are preserved. India clearly feels that Dhaka should be happy with $125 million annually as transit fees but Bangladesh does not see it as a fair deal.

If the pipeline is laid through Bangladesh to West Bengal - as it was originally planned - it will be 900km long and cost around Rs450 million. If it is laid through the northeast bypassing Bangladesh, the pipeline will be 500 km longer. And the additional cost will be to the tune of Rs250 million. But the additional cost will be offset by the transit fee that Bangladesh will charge for allowing the pipeline to pass through its territory.

If the pipeline enters India directly from Myanmar through the northeastern states, it would come as a boon as the gas produced in these states cannot be piped to the more lucrative markets elsewhere in India at present. The region as well as oil exploration companies would gain from higher prices, if the northeastern gas can be shipped. "A pipeline is like a road, it benefits the entire territory that it passes through", a senior Gail official said. Since the gas from Myanmar is expected to flow over a period of 15 to 20 years or even more, the expenses of laying the pipeline entirely through the Indian territory could well be worth the additional cost. "While petroleum minister Mani Shankar Aiyar had made good headway with the proposed Myanmar-India-Bangladesh pipeline, Dhaka has queered the pitch by bringing in bilateral issues into trilateral talks", a senior official pointed out.

India is predicted to require 400 million standard cubic meters of gas per day by 2025, up from today's 90 million standard cubic metres. The pipeline was one of several options India has been considering to bring gas reserves from the Shwe Field's Block A-1 site. India's state-run Oil and Natural Gas Corporation has a 20 per cent stake in Myanmar's A-1 and A-3 Blocks, while GAIL has a 10 per cent stake in the two sites.

This year, India also struck a 25-year deal to import 7.5 million tonnes of liquefied natural gas a year from Iran from 2009. Energy-hungry India is increasingly looking for more fuel as demand soars with rapid economic growth.

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