The Hindu : First shipment of gas from Qatar arriving this week

Online edition of India's National Newspaper
Monday, Jan 26, 2004

International

International - India & World

First shipment of gas from Qatar arriving this week

By Atul Aneja

MANAMA, JAN. 25. After years of preparation, resource-rich Qatar is set to deliver its first shipment of natural gas, bringing the Gulf state firmly on India's energy security map.

The LNG container `Disha' will head for the terminal in Dahej in Gujarat on Tuesday and arrive there after three days. Under the contract involving Qatar's RasGas and India's Petronet LNG Limited (PLL), the Dahej terminal will annually receive five million tonnes of gas for 25 years. Loading on the ship began on Sunday in the presence of Qatar's Second Deputy Prime Minister and Minister of Energy and Industry, Abdullah bin Hamad Al Attiyah, the Finance Minister, Yousef H. Kamal, and B.K Chaturvedi, Secretary, Ministry of Petroleum and Natural Gas.

India will import the gas from Qatar at an aggregate fixed annual price of $800 million until December 2008, which, according to analysts, is at least 25 per cent cheaper than the existing LNG prices in Asia.

India has a growing demand for natural gas, which has risen from only 0.6 trillion cubic feet (Tcf) a year in 1995, to nearly 0.8 Tcf in 2000. It is projected to touch 1.2 Tcf in 2005 and 1.6 Tcf in 2010.

The deal with Qatar acquires additional importance as India's difficulties in acquiring lowcost gas from other sources abroad are yet to be removed. For instance, Iran and Bangladesh are two possible suppliers of natural gas to India. Iran has been proposing sending gas from its south Pars field.

But transiting this gas through a pipeline is problematic. A possible land route from Iran to India via Pakistan is practically unavailable on account of the existing political difficulties in the India-Pakistan relationship. The alternative of sending Iranian supplies along the seabed either through the shallow or deep-sea route is likely to prove prohibitively expensive.

Bangladesh, India's eastern neighbour, has proven reserves of 14 Tcf. According to an estimate by the U.S. Geological Survey, the country's reserves are closer to 32 Tcf. Bangladesh has been reluctant to permit exports to India, until all aspects about its reserves and domestic needs are resolved.

However, the discovery of gas in 2002 in the Krishna-Godavari basin, which is estimated at 5 Tcf, is likely to encourage Bangladesh to find a place in the Indian market.

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