A high-level Indian delegation is expected to visit Pakistan mid-August to finalise a deal on sale of 200 Million Cubic Feet per Day (mmcfd) of Liquefied Natural Gas (LNG), officials said. According to Petroleum Ministry sources, all the modalities other than settling on the price of the commodity have been finalised between the two countries.
Talks were held in March and April 2014 in New Delhi during which it was decided that the next round of talks would be in Islamabad and Pakistan is set to host officials from the state owned GAIL (India) Limited, the largest state-owned natural gas processing and distribution company in India, in the second week of August.
It is hoped that the dispute on price would be resolved between India and Pakistan and import of LNG from India can then begin witthin 9 months via Wagha Borde "Both the sides discussed term sheets, commodity prices, building of infrastructure and other necessary actions required to import LNG from India," the Petroleum Ministry official stated.
"Pakistan initially wanted to import 200 mmcfd of LNG however no agreement has been reached on price. India is importing LNG at $13 and 14 per Million British Thermal Units (mmbtu), and has offered Pakistan at $21 per mmbtu after including customs or import duty, pipeline transportation charges and local taxes," the official added. Although Pakistan currently does not have an LNG import facility, it is willing to buy LNG from GAIL provided that India exempts it from taxes to bring down the cost, they maintained.
If India agrees to provide LNG to Pakistan at around $17 per mmbtu it will be a win-win situation for the two countries as India will earn a significant profit and Pakistan will get the commodity at lower prices relative to current international LNG prices, which at present hover in the range $16-17 per mmbtu and after including shipping and other expenditures will cost end consumers around $19 per mmbtu.
India has proposed to lay a 110 kms pipeline from Jalandhar to the Wagha border via Amritsar to supply natural gas to Pakistan. The LNG will be imported via ports in Gujarat and will be moved through GAIL's existing pipeline network till Jalandhar. The proposed line will ensure the transfer of gas from Jalandhar to Wagha.