India in talks with Russia to swap natural gas with China

India is in early talks with Russia to swap natural gas with China and Myanmar as an alternative to building world's most expensive pipeline costing close to $25 billion.

The two nations had in October signed an initial pact for building a 4,500 km to 6,000 km long pipeline from Siberia to the world's third biggest energy consuming nation.

ONGC Videsh Ltd Managing Director Narendra K Verma said talks are on with Russian gas monopoly Gazprom for an alternative swap.

"Myanmar sells gas to China through an existing pipeline. If Russia can provide equivalent gas to China, then we can reverse the flow of gas from Myanmar to China and bring that gas to India," he said on the sidelines of the Petrotech conference here.

So in effect Russia will supply gas to China and in return China will give its share of gas from Myanmar to India. A smaller pipeline from Myanmar will need to be built into eastern India for importing that gas, he said.

The swap is more economical but would require China and Myanmar coming on board.

The Russia-to-India pipeline that was being considered will see its route passing through the Himalayas into Northern India, a route which poses several technical challenges.

Alternately, the pipeline can come via Central Asian nations, Iran and Pakistan into Western India. However, the route will be expensive when compared to the long discussed but shorter and cheaper Iran-Pakistan-India pipeline. Tehran may suggest India take its gas through IPI rather than building such an expensive pipeline, sources said.

The third and the longest alternative is to lay a pipeline through China and Myanmar into North East India bypassing Bangladesh.

According to preliminary cost estimate prepared by state-owned Engineers India Ltd, which in October signed an agreement with Gazprom for studying the Russia-India pipeline, the longest route of 6,000 km may cost close to $25 billion.

The cost of transporting gas may be $12 per million British thermal unit, according to EIL.

The MoU signed in the presence of Prime Minister Narendra Modi and Russian President Vladimir Putin at the India-Russia Annual Summit on sidelines of the 8th BRICS Summit in New Delhi, also envisages roping in ONGC Videsh Ltd, gas utility GAIL India Ltd and Petronet LNG Ltd for the study.

Sources said natural gas produced in East Siberian fields is to be pumped into Russian gas grid which would be connected to India through the cross-country pipeline network.

While the cost of transporting gas via the long discussed IPI pipeline is less than $1 per mmBtu, the same for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline is around $2 per mmBtu.

According to industry experts, a realistic transportation cost would be $4 per mmBtu for the Russia-India gas pipeline. This excludes the transit fee to be paid to nations through which the pipeline will pass.

Russia is seeking to expand energy ties in Asia amid tensions with the West sparked by Moscow's annexation of Crimea in 2014.