India approves plan for Turkmenistan gas imports.

NEW DELHI (Reuters) - India's cabinet on Thursday allowed state-run gas-firm GAIL (India) Ltd to sign a gas purchase agreement with Turkmenistan's national oil firm, for supplies from a planned multi-national pipeline, a government statement said.

The proposed 1,700-km (1,056-mile) Turkmenistan-Afghanistan-Pakistan-India line (TAPI) will have a capacity to carry 90 million cubic metres a day (mcmd) gas for a 30-year period and will be operational in 2018, the statement said.

India and Pakistan would get 38 mcmd each while the remaining 14 mcmd will be supplied to Afghanistan, it said.

Turkmenistan, which holds more than 4 percent of the world's natural gas reserves, is hosting a meeting next week with participants in the U.S.-backed TAPI project to link Turkmen gas fields with India.

Petroleum Minister S. Jaipal Reddy is scheduled to lead a delegation to Turkmenistan to sign the agreement on May 23-24. India has nominated state-run GAIL for the purchase of gas.

The pipeline route, particularly the 735-km (450-mile) Afghan leg, presents significant security challenges and will require Pakistan and India to agree on price and other aspects. Participants must also secure funding for the project.

"The provisions of the GSPA (Gas Sale Purchase Agreement) have been structured to protect India's commercial interests as India is at the tail end of the pipeline," the statement said, without elaborating further.

"Transit fee and security aspect have been settled," a government source, who did not wish to be identified told reporters after the cabinet meeting.

Separately, an oil ministry official said that the transit fee for the gas has been fixed at about 50 cents per million British thermal units (mmBtu).

The TAPI pipeline is estimated to cost about $10-12 billion, while development of the gas field may cost about an additional $10 billion, said Daniel D Stein, senior energy adviser at the U.S. Department of State said in a presentation in March.

India, Asia's third largest oil consumer, imports about 80 percent of its oil needs while falling local gas output has forced it to buy costly liquefied natural gas.

The planned pipeline will help India and Pakistan diversify their gas supply, while Turkmenistan, a former Soviet republic, wants to triple annual gas exports to 180 billion cubic metres by 2030, looking beyond its traditional partner Russia to wider export markets.

Turkmenistan aims to supply natural gas from its Galkynysh field, better known by its previous name, South Iolotan, to Pakistan and India. British auditor Gaffney, Cline & Associates has said the gas field is the world's second-largest.

Source : moneycontrol.com