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China corners cheap OVL, GAIL gas from Myanmar, India cut out of deal

Date: 26/08/2013
Source: The Financial Express
China corners cheap OVL, GAIL gas from Myanmar, India cut out of deal

It is a paradoxical situation. Even as India frets over the rising cost of fuel like imported liquefied natural gas (LNG), two of the countrys public sector companies are able to sell gas at a much lower price to China. State-run ONGC Videsh (OVL) and GAIL

India along with its international partners are selling gas from two of their Myanmar blocks A1 and A3 to Chinese consumers at $9/million metric British thermal unit (mmBtu). In comparison, India pays $12-15/mmBtu for spot LNG cargoes at present.
Gas from the two Myanmar blocks are transported though a 870-km cross-border pipeline to China. Since late July, energy-hungry China has been buying natural gas from the A1 and A3 blocks.

The price of $9/ mmBtu for the Myanmar gas is comparable to domestic gas prices in China that have recently been hiked for non-residential consumers by about 15.4% to an average of 1.95 yuan per cubic metre or about $8.90/mmBtu. Pipeline imports from neighbouring countries like Turkmenistan and Uzbekistan are higher at around $10/mmBtu.

For India, this signifies a missed opportunity. OVL and GAIL officials say though they had proposed to import this gas into India through northeastern states, Beijing prevailed upon Naypyidaw to sign an agreement to supply gas exclusively to it. India now imports LNG from countries like Qatar and Australia.

Asian importers like India, China, Japan and South Korea along with Latin American countries like Brazil pay the highest prices for LNG at around $13-16/mmBtu, according to the US Federal

Topic: Business
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