India May Pay $11.5 per unit For Turkmen Gas

India is likely to pay around $11.5/unit for 38 million standard cubic meters per day of gas supplies from Turkmenistan, the Economic Times reported. The country will sign the gas sale purchase agreement (GSPA) this week when oil minister visits the central Asian nation.

The GSPA would pave way for construction of $7.5 TAPI pipeline, which would also supply gas to Afghanistan and Pakistan. Last week the Indian cabinet approved the 1,680-km gas pipeline project.

Turkmen gas would be significantly cheaper than liquefied natural gas (LNG) sold in spot market, government and industry officials told the newspaper.

India currently pays a spot price of about $16 a unit for LNG. Petronet LNG has recently contracted LNG import from Australia's Gorgon project at $15.8 per unit while Gail's 20-year contract with US' Sabine Pass works out to be around $10-11 per unit.

"At the current market price, the landed price of gas would be little more than $11/unit. But price will fluctuate as it expected to be linked with international fuel oil rates," the report said citing a government official.

India has also finalized transit fee and other related matters with Afghanistan and Pakistan, as the pipeline would cross their borders. Pakistan has already assured that it would charge a uniform transit fee, government officials said.

The GSPA will be executed by state-run gas utility Gail, which is India's nominee for the $7.5-billion pipeline project.

After GSPA is signed, four partners would constitute a consortium by 2013 that would build and operate the pipeline. TAPI project would be completed by 2016.

Officials said it was already decided among partners that security of the pipeline would be ensured by the countries on the way.