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Natural Gas Imports by South Asia: Pipelines or Pipedreams?
journal contributionposted on 1998-09-01, 00:00 authored by Rahul Tongia, V. S. Arunachalam
There must be few other situations where there are eager purchasers of natural gas (India and Pakistan), willing suppliers of natural gas (Turkmenistan, Iran, Qatar and Oman), and yet, no pipeline. The distances involved are modest, and techno-economic viability appears straightforward. This paper examines in detail the policy, technology, and economics of an overland pipeline supplying natural gas to Pakistan and India. Such a pipeline would be shared by both countries, and would represent a unique opportunity for cooperation.† As pipelines exhibit significant economies of scale, a shared pipeline would offer the lowest price natural gas for both countries. Pakistani consumers would obtain cheaper gas than from a lower capacity pipeline for their exclusive use, also benefiting from transit fees paid by Indian consumers. An alternative to land-based pipelines through Pakistan for India would be liquefied natural gas, which is more expensive due to the capital-intensive nature of the liquefaction process. However, any overland gas pipeline does not depend solely on economic viability, but on political acceptance as well. This study addresses some of the potential concerns, briefly discussing options for overcoming security of supply worries. Through cooperating on such a venture, one that offers the promise of significantly helping to build the infrastructure of both countries, there is the possibility of the neighboring countries becoming partners in progress, instead of languishing as prisoners of geography.