Implementing Sub-sea Transnational Gas Pipeline - Superhighways on Fast Track

Subodh Kumar Jain,
Managing Director, Siddhomal Group,
India has been mulling over transnational Gas pipelines over the past two decades, while the Chinese government has gone ahead and implemented five projects within a decade, which has further consolidated the position in world markets as the preferred Pipeline Gas destination. South Asia Gas Enterprise (SAGE), part of the Siddhomal Group, has proposed in building a series of subsea pipeline from the Middle East, to bring natural gas to Indian market. However the project SAGE has been in a limbo for a very long time due to geopolitical issues. Subodh Kumar Jain, Managing Director, Siddhomal Group, spoke exclusively to Offshore World on various aspects of proposed project and why it makes sense to install the Middle East Subsea Pipeline Project. Excerpts…

What are your thoughts on the Sino-Russia historic gas agreement with the transnational pipeline deal and China has once again gone one step ahead towards securing energy supplies for the next three decades?
Russia holds almost 16.8 per cent of world's gas reserves, estimated at around 1103.6 TCF which makes it 2nd largest after Iran. The country has stepped up the efforts to increase its gas export markets over the last decade beyond its traditional European market and established strategic ties with China for the geopolitical reasons to reduce reliance on European market which has been traditionally receiving supplies from Russia. There have been speculations on price over the deal as nothing concrete is available and there have been numerous guesstimates ranging from USD 8.5 to USD 10 per MMBTU as the price of gas over the next 30 years.

China has established gas linkages with other neighbouring & nearby countries as well, through gas pipelines, to meet the gas requirements and reduced dependency on LNG which would require them to set up re -gassification plants in the country. It is commendable how China has gone ahead and established linkages with Russia in less than a decade, whereas, India has failed to develop the international gas linkages both onshore and offshore pipelines, though the talks have been going on for the last two decades.

How far can the transnational pipelines go towards securing energy supplies in Indian context?
The US Department of Energy has predicted the shortfall of 3560 MSCFD by 2030 in India. Lack of availability of hydrocarbon resources has further created the urgent need for the country to establish linkages to secure long term gas supplies towards energy security of the country.

Globally, gas transportation networks are well established with cross country pipelines both onshore and offshore running across Northern Europe, China, Russia to Europe, USA to Canada and West Africa.

Whether onshore or offshore, pipeline projects are considered to be viable. For offshore pipeline Projects there is added advantage of not having to pay Transit Fee.

Though, Middle East, India's traditionally strategic trading partners, holds over 2,000 TCF of natural gas reserves, including Qatar, Iran and Turkmenistan, we have failed to establish cross country gas pipelines due to various geopolitical issues to secure energy supplies, which can significantly contribute towards our energy security.

We, as a country, seem to lack the political will to do such Projects, in a Time Bound Manner.

As Iran, the largest gas reserves globally, is looking for export markets; Qatar is targeting newer gas markets owing to shale gas boom in the USA which has resulted in demand disruption of supplies from the country; Iraq has accelerated its gas development programme and is gearing up to supply to global markets. This would be created a win-win situation for India as well as Middle East countries.

In case of India, the online transnational gas pipeline projects, be it Turkmenistan, Afghanistan, Pakistan India (TAPI) or Iran-Pakistan India (IPI ) pipeline projects, are techno commercially viable, however the geopolitical issues have been a major bottleneck in execution of these projects.

On the contrary, subsea pipelines do not face any such issues and with the advancements in technology the projects are very much viable now-a-days.

Geopolitically, the undersea pipeline through the Arabian Sea would be a much safer option for India to secure long term energy supplies. Having said that, the landed price of natural gas would be lesser as compared to the landing price of LNG in the country and long term gas supplies come with the added advantage of price stability unlike LNG prices which are subjected to constant fluctuations due to countinious geopolitical instability in various regions of Middle East.

SAGE's project to install Middle East to India Gas Pipeline (MEIDP), and is working on the feasibility of project to bring the natural gas supplies to India through subsea pipelines to the Gujarat coast. This project is a pioneering step in India's quest for energy security for rapid economic growth with cleaner energy.

What are the features of the proposed energy corridor?
SAGE features an upstream Middle East Natural Gas-Gathering System connecting Multiple Gas Sources in the Middle-East. From this GULF Gas Hub, the SAGE family of deepwater pipelines will cross the Arabian Sea to the south of the Territorial Waters and Economic Exclusion Zones of all Third Party Countries and will mainly follow a route to India, reaching a depth of 3500 meter, which was extensively surveyed 15 years ago.

The SAGE pipelines are envisaged as 'Common Carriers' that will provide a gas transportation infrastructure to multiple Gas Sellers in the Middle East and multiple Gas Buyers in India, for an estimated Tariff in the region of USD 1.5/ USD 1.75 per Million BTU from the Oman/ Iran coast to the Indian coast. We have envisaged three natural gas pipelines through this route over the next decade with capacity of 31 million standard cubic meters per day of gas which is sufficient for 7000–7500 MW power generation and producing several million tonnes of fertilisers annually.

Each SAGE pipeline will deliver around 8 TCF of Natural Gas to India over 25 years (31 mmscmd). This pipeline project will complement LNG sales to India , due to the increasing volatility of LNG pricing as an internationally traded spot-market commodity. Due to recent Indian Rupee steep depreciation, the subsidised Power & Fertiliser Industry needs more Pipeline Gas to remain competitive.

The new SAGE 'Energy Corridor' which plans to complete its 1st phase by end -2017 will enable Middle East/Gulf Suppliers to deliver Natural Gas to Gas Buyers in India.

How do you compare the offshore MEIDP pipeline with the onshore pipelines like TAPI & IPI?
Direct connectivity, I see as one of the biggest advantages with the MEIDP pipeline, since unlike IPI or TAPI it would not cross any of the borders of any such countries which are geopolitical conflicts.

This added advantage is the transit charges do not have to be paid, which usually adds to the cost, third there are no external threats to the pipelines due to any political issues etc.

The SAGE pipeline comes directly to India, avoiding Pakistan/Afghanistan, the countries have been mostly disturbed with internal conflicts and growing insurgencies activities. Also, there are no technical issues now-a-days related to deep water pipeline - over the years there has been significant advancement in technology and there are several successful projects already in operation and there are many.

Middle East has proven to be reliable and long term Oil & Gas supplier to India and MEIDP/SAGE pipeline is another step in this direction.

Talk about the techno commercial feasibility of the proposed MIEDP project.
Since the feasibility studies were carried out, the techniques of deepwater pipelay and line pipe manufacture have matured as the Oil & Gas Industry has accumulated substantial experience of working in very deep waters. Quantified Risk Assessment shows this very deepwater environment to be a benign and protective environment for the system.

One of the biggest advantages of the pipeline is long Term Gas supply through pipeline comes at stable price, unlike the volatile LNG prices.

Availability of Gas through Transnational Gas pipelines will also help in determining real market price for Gas, as in Europe.

What is the current stage of the project and when do you intend to go for awarding the contract?
We are working with the Experts from deepwater and hired ace contractors and specialists from worldover for this project. Our Technology partner, Peritus Consultants is by far the best globally and we have signed MoU with the leading oil & gas deepwater pipeline specialists Saipem (Italy), Heerema Marine Contractors (HMC)/INTECSEA/Tata - Corus/Enginers India Ltd (EIL).

We have received significant technical inputs from several pipeline manufacturers like Corus, which is also partner in the MoU and regulatory agency DNV, Norway has approved the pipe size for safety approvals.

Indian Pipe Mills WELSPUN and JINDAL Saw have also undertaken lots of Pipe Tests for pre-qualification for SAGE Project.

Geo-physical Survey activities has completed in mid-June 2013 with the Vessel, FUGRO GAUSS (Germany) in the Arabian & Oman Seas with positive results.

This will help to move to FEED Study stage and award of EPC Contract by end year 2014/ Mid 2015.

The SAGE Consortium plans to attract Investors both from India and the Middle East and to provide them with the opportunity for investment in the downstream developments facilitated by access to SAGE gas, such as Power and Fertiliser plants and City Gas Distribution in India.

How important it is for India to execute the project on fast track ?
Most countries depend on 15 to 20 per cent of energy generated through Natural Gas. The growing energy demand comes from India's household needs and consumer sectors like Power & Fertliser, thus the country cannot continue depending entirely on Coal, Nuclear Energy, Hydel and Renewable and needs to diversify the energy basket.

It is time to move forward and to realise at least one Transnational Gas pipeline in the next few years, in order to generate confidence and hope in the country and generate power using a more environmentally friendly Fuel .

SAGE Project got somewhat delayed due to the UN/EU/US Sanctions in Iran. Recent development indicates a positive headway as EU and the US have eased many of their curbs after Tehran began implementing a deal to curb its nuclear programme.

We have been trying to convince all the stakeholders about the Technical /Commercial viability of the Project and hope to get further Government support for our Initiative.

It's a Win-Win situation for everyone!