Wednesday, June 8 2005 13:32 Hrs (IST) - World Time -

Islamabad: Importing gas from Iran through a pipeline via Pakistan will work out cheaper for India, with consultants estimating that it would cost just between $2.40 to $2.49 per million British thermal unit (mBtu).

The piped gas would be cheaper than shipping in liquefied natural gas (LNG), which would cost $4,10 per mBtu, Indian officials told reporters in Islamabad, quoting estimates given by consultants working on the 2,600 Iran-India pipeline project.

New Delhi and Islamabad have agreed to use the Iran-Pakistan-India pipeline, which would cost $4.16 to build, to import gas for meeting their humungous energy needs.

The 56-inch wide 2,600 km line from Assaluyeh in southern Iran to Rajasthan border in India, with a capacity to convey 137 million standard cubic meters per day (mmscmd) gas, would cost $4.5 billion.

The delivered price of gas at Rajasthan border would be $2.40 per mBtu, the official said.

Gas fed through a 48-inch pipeline, which would cost $3.9billion to build, would cost $2.43 per mBtu while the same through a 42-inch pipeline, costing $3.1 billion, would cost $2.49 per mBtu.

However, Iran has been insisting on a price equivalent to the liquefied natural gas (LNG) for the natural gas it proposes to sell to India through the pipeline.

The pipeline, which would wade 760 km through Pakistan soil before reaching the Indian State of Rajasthan, would result in earnings of "$199 to $413 million annually by way of transit fee" for Islamabad.

The transit fee would be $0.33 per mBtu ($0.047 per mBtu per 100-kms), an Indian official said, citing the report prepared by a group of consultants, including BHP Billiton of Australia.

BHP Billiton has already conducted a pre-feasibility study of the pipeline, which would connect Iran's South Pars gas fields (off Assaluyeh) with India's main trunk line of HVJ.

According to estimates, the 1,115-km line from Assaluyah in Iran to the Pakistani border would cost an estimated $1.86 billion, while that of 760-km line in Pakistan was pegged at $1.20 billion.

Another $1.5 billion would be needed for connecting it with HVJ line of India.

Officials said consultants had suggested involvement of an international consortium of bankers and oil firms for building and operation of the project.

They had also suggested creation of gas reserves on Indian border to maintain supplies in the event of a sabotage of the pipeline.

Besides they suggested having in place motion detectors and satellite monitoring of the pipeline to prevent sabotage.

Underground reserve tanks would be constructed on the Indian border to stock enough supplies to meet gas requirement for at least 30 days.

Iran has already guaranteed to supply of natural gas by ships (in LNG form) at the same price, as the piped gas should there be a disruption or sabotage.