Bangladesh approves India-Myanmar gas pipeline through its territory

Mar 02, 2010 01:00 AM

Bangladesh's Sheikh Hasina government has given its approval for the construction of the 900 km gas pipeline linking India and Myanmar, running through its territory.
The India, Bangladesh and Myanmar tri-nation gas pipeline, which is expected to carry Myanmar gas to India's north eastern region, has been entangled in bureaucratic controversies for several years. Bangladesh's change in stance follows the ouster of the Begum Khaleda Zia regime, which was replaced by India-friendly Hasina government in the January 2009 general election.

The Bangladesh government communicated its willingness to allow passage of the pipe line through it territory during India's power secretary H.S. Brahma's visit to Bangladesh. Sheikh Hasina had visited India in January after taking charge as the new prime minister.
''The energy adviser to the prime minister of Bangladesh, Tawfiq-e-Elahi Chowdhury, communicated its (Bangladesh's) willingness to be part of the pipeline project,'' Brahma told. ''We have to seewhat amount of gas reserves we are talking about. I am going to forward our report to the ministry of external affairs,'' he added.

In December, Myanmar's ambassador to India U. Kyi Thein told that the tri-nation gas pipeline may materialise in two to three years time.
"Something can happen in two to three years with Indian companies like GAIL, Essar Oil, ONGC, IOC exploring gas in Myanmar," Thein told on the sidelines of an interactive session. Myanmar has gas reserves of 89.72 tcf, of which 18.01 tcf can be easily extracted. A gas-hungry India has been seeking gas supplies from Myanmar, which has significant reserves in which many Indian state-run companies have substantial shares.

A few weeks back, the cabinet committee on economic affairs had given its sanction to OVL, the overseas arm of oil and gas explorer Oil and Natural Gas Corp. Ltd., and GAIL (India) an additional investment of a total of $ 1.33 bn in offshore gas projects in Myanmar's western Rakhine state.
OVL can now acquire a 20-%participating interest in upstream oil development for which it will pay $ 664.7 mm and an 8.35 % interest in onshore midstream project, PIPECO-2, for another $ 167.84 mm. OVL expects the two investments to yield an internal rate of return of 12.53 % and 15.5 %, respectively.

The gas exploration and production in the two blocks are undertaken by a consortium led by the Daewoo International with 51 % of stake, also shared by ONGC of India with 17 %, GAIL with 8.5 %, Korea Gas Crop with 8.5 % and Myanmar Oil and Gas Enterprise (MOGE) with 15 %.
In a related development, OVL and GAIL will take stakes of 8.35 % and 4.17 %, respectively, in a pipeline being constructed by China National Petroleum Corp. (CNPC) to transport gas from the offshore blocks A-1 and A-3 to China. The $ 2-bn gas pipeline project involves China National Petroleum Corp (CNPC) with 50.9 %, Daewoo with 25.04 %, Korea Gas Corp with 4.17 %, ONGC and GAIL with 12.52 % and MOGE with 7.37 %.

Gas from the blocks would be sold to China for $ 7.72 per mm Btu at the landfall point in Myanmar. Myanmar has abundance of natural gas resources especially in the offshore areas.
With three main large offshore oil and gas fields and 19 onshore ones, Myanmar has proven recoverable reserve of 18.012 tcf or 510 bn cm out of 89.722 tcf or 2.54 tcm estimated reserve of offshore and onshore gas, experts said. The country is also estimated to have 3.2 bn barrels of recoverable crude oil reserves.

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