Turkmenistan is seeking a price linked fuel oil or naphtha for the natural gas it plans to sell to India through a $ 7.6 billion pipeline passing through Afghanistan and Pakistan.
India has rejected the demand as the Technical Working Group (TWG) on the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline got underway in Ashgabat today.
Official sources said Turkmengas, the national oil firm of Turkmenistan, first sought a price linked to fuel oil but later changed it to naphtha reasoning that natural gas was meant to replace these liquid fuel power plants.
India however turned down the demand saying its refineries were already producing surplus naphtha and saw no logic in linking the price of natural gas to it.
Turkmenistan later changed track seeking a price equivalent to the delivered price of liquefied natural gas that India currently imports under long-term contract from Qatar and will be shipping from Australia in couple of years.
LNG from Qatar costing a shade lower than $ 8 per million British thermal unit and price of Australian LNG pegged around USD 16 per mmBtu - four times the prevailing rates for domestic gas.
Sources said India rejected even this saying if it wanted gas at those rates it would not be willing to invest in the multi billion dollar pipeline and instead would have simply increased imported volumes.
TWG, comprising officials of the four countries in the TAPI pipeline project, are to finalise Gas Sales Purchase Agreement (GSPA) this week.
The Asian Development Bank (ADB) is the Lead Development Partner of the project which envisages supply of gas from Turkmenistan’s South Yoloten-Osman field.
Sources said Turkmenistan will give delivery of gas at Afghanistan border and thereafter a consortium of companies which would be formed to execute the project, will take over from there to deliver gas to the host country through which gas pipeline will pass.
The total length of the pipeline passing through Afghanistan and Pakistan is 1,650 kilometres before entering India at Fazilka, Punjab.
As per the plan, 38 million standard cubic meters per day of gas would go to India and Pakistan each while 14 mmscmd would be bought by Afghanistan.
New Delhi is apprehensive about the safe passage of the gas through the pipeline in Afghanistan and Pakistan.
A rival project for transporting gas from Iran to India via Pakistan through another transnational pipeline -dubbed the Iran-Pakistan-India (IPI) pipeline - has been stuck on the drawing board for over a decade now because of concerns over the safe passage of gas through Pakistani territory.