Business Standard: TAPI agreement set to expand India's gas basket

India on Wednesday signed the gas sale purchase agreement (GSPA) for the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline, which upon completion would diversify its gas basket. With domestic gas output stagnating, the $7.6-billion Tapi gas project provides a ray of hope.

In five years, the country would have access to imported natural gas, in addition to imported liquefied natural gas and domestic sources, including coal bed methane gas.

While the government statement did not mention the price at which gas would be imported, the landed price of gas would be cheaper than the import price of Qatari gas in 2018. Qatar’s RasGas charges 12.67 per cent of Japanese crude cocktail and Petronet pays an additional $0.26 per mBtu for shipping the gas in its liquid form from Qatar. This currently costs $8-10 per mBtu. “Different sources will come at different price, but the availability is important from a future perspective,” said Dilip Khanna, partner (oil & gas practice), Ernst & Young.However, despite the increased supply, prices would inch higher. Though Reliance Industries (RIL)’s gas price of $4.2 a million British thermal units (mBtu) is the current benchmark for domestic natural gas, it is due for revision in 2014. Petronet LNG (PLL), the only importer of long-term natural gas, would also see a price rise by its Qatari suppliers. MORE