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| GAIL may buy stake in China's CNPC |
| Press Trust of India / New Delhi Sep 08, 2009, 17:19 IST |
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State-run gas utility GAIL India may take a stake in the $1.95-billion gas pipeline that China is building for ferrying natural gas found off the Myanmar coast.
"We have received a proposal for joining the project. We are examining the prospects," GAIL Chairman and Managing Director B C Tripathi told reporters here.
China National Petroleum Corp (CNPC) is laying a 870-km pipeline in Myanmar to transport gas found in blocks A-1 and A-3 to mainland China.
CNPC has offered 49.9 per cent stake to the consortium developing gas fields in blocks A-1 and A-3.
South Korea's Daewoo Corp holds 51 per cent stake each in block A-1 and A-3 while ONGC Videsh has 17 per cent interest. GAIL and Korea Gas Corp have 8.5 per cent each. Myanmar's state-run Myanma Oil and Gas Enterprise (MOGE) has the remaining 15 per cent.
Tripathi said the proposal that has come from Daewoo was inclined to participate in the 40-inch pipeline.
If all the consortium members decide to participate, the shareholding in the pipeline project would be CNPC (50.9 per cent), MOGE (7.37 per cent), Daewoo (25.04 per cent), OVL (8.35 per cent), GAIL and KOGAS (4.17 per cent each).
Gas from A-1 and A-3 will be sold to China for $7.72 per million British thermal unit at the landfall point in Myanmar. Tripathi said work on the pipeline is likely to begin "sometime next year".
Daewoo-OVL-GAIL-KOGAS may invest $2.79 billion in three gas fields in block A-1 and A-3 off the Myanmar coast and another $936.26 million in laying an under-sea pipeline to take the gas to the shore, sources said.
Sources said operator Daewoo has prepared a preliminary Field Development Plan (FDP) to tie-up Shwe and Shwe Phyu in Block A-1 and Mya in Block A-3 together to produce a plateau of 500 million standard cubic feet per day of gas for 19 years. The field life is envisaged for 28 years.
First gas is anticipated in first quarter of 2013, they said.
Myanmar has decided that the gas from A-1 and A-3 would go to China. CNPC will pay $6.71 per mmBtu for the gas plus a offshore pipeline tariff of $1.02 per mmBtu. The 30 year sale contract is indexed to US inflation, sources said.
The preliminary FDP envisages development of gas fields in phased manner - Shwe and Mya (North) fields in phase-1, addition of Mya (South) field in phase-2, addition of Shwe Phyu field in phase-3 and installation of future compressor once pressure declines at Central Process Platform (CPP). Sources said the gas in A-1 and A-3 is lean (99 per cent methane) with less impurities.
Gas reserves of 4.532 Trillion cubic feet (Tcf) in Blocks A-1 and A-3 have been certified. In the preliminary FDP, 4.162 Tcf of reserves in Shwe, Shwe Phyu and Mya have been taken. So far, the commercial viability of the natural gas discovery in both the blocks has not been declared.
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