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| ONGC, GAIL eye 12.5% stake in Chinese gas pipeline |
| Press Trust of India / New Delhi Dec 29, 2009, 15:04 IST |
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State-run Oil and Natural Gas Corporation (ONGC) and GAIL India plans to take 12.5 per cent stake in the $2.01 billion (around Rs 9,300 crore) gas pipeline that China is building in Myanmar to transport natural gas found in the Bay of Bengal.
Sources said the Cabinet Committee on Economic Affairs is likely to soon consider a proposal allowing ONGC Videsh, the overseas arm of the state explorer, and GAIL to invest $251.2 million (around Rs 1,170 crore) in the 870-km pipeline China National Petroleum Corp (CNPC) is laying in Myanmar to supply gas found in offshore blocks A-1 and A-3 to mainland China.
ONGC has agreed to lend about Rs 4,000 crore to OVL to fund its share of cost of developing the gas fields in A-1 and A-3 blocks and the pipeline to China.
Sources said that 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 OVL has 17 per cent stake. GAIL and Korea Gas Corp have 8.5 per cent each while the remaining 15 per cent is with Myanmar's Myanma Oil and Gas Enterprise (MOGE).
The consortium is investing $3.61 billion in bringing to production gas fields in the two blocks.
Sources said Daewoo too was inclined to participate in the 40-inch pipeline and final 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 would be sold to China for $7.72 per million British thermal unit (mBtu) at the landfall point in Myanmar.
Daewoo-OVL-GAIL-KOGAS would 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 Shwe and Shwe Phyu gas fields in Block A-1 and Mya discovery in Block A-3 would be tied 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 the 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 mBtu for the gas plus an offshore pipeline tariff of $1.02 per mBtu. The 30 year sale contract is indexed to US inflation, sources said.
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.
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