posted on 1998-09-01, 00:00authored byRahul 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.