With the lifting of Western sanctions, hydrocarbon-rich Iran is positive on finalising an agreement with India for setting up a $4.5-billion undersea gas pipeline.

Iran state-owned National Iranian Gas Export Company’s (NIGEC’s) managing director Alireza Kameli said the 1,400-km pipeline would transport natural gas via the Oman Sea and Arabian Sea, and was among the four major contracts under negotiation by the Iran’s state-owned firm. “Our negotiations have been under serious considerations for some time and we hope to soon finalise an agreement for the South Asia Gas Enterprise (SAGE) pipeline project,” Kameli said, during the fifth World Energy Policy Summit here.

SAGE’s proposed pipeline would bypass Pakistan’s exclusive economic zone and transport up to 31.1 million standard cubic metres per day of gas from Chabahar in Iran and Ra’s al Jifan in Oman to Porbandar in Gujarat, with a possible extension to Mumbai later. India has not been participating in talks on the Iran-Pakistan-India (IPI) pipeline. Also, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project is yet to take off.

Companies keen to buy gas from Iran would be able to sign supply contracts with NIGEC and the SAGE pipeline would work as a common carrier, charging a fees. The current rate for bringing gas from Iran to Gujarat is $2.25 per million British thermal units.

“Pakistan is building a smaller pipeline from Iran to Pakistan. Also, we have been talking about TAPI and IPI for more than 20 years. It is time for at least one project to get going. Both the oil ministry and the ministry of external affairs are supportive of the project,” SAGE director S K Jain said.

Adding: “The gas infrastructure will be used by all state-owned companies like GAIL and Indian Oil Corporation.” SAGE, a consortium of global companies in deepwater pipeline projects, is promoted by Delhi-based Siddho Mal Group, in joint venture with a UK-based deepwater technology company.

PIPELINE ROUTE Two options exist for transportation of natural gas through the SAGE pipeline. Passing through the Arabian Sea, the pipeline will reach depths of 3,400 metres under the sea and a length of 1,400 km

The base case originates in Oman, at the Middle East Compression Station, and ends in India, at the Gujarat Pipeline Receiving Terminal, near Porbandar

In the first route, MECS-GPRT, a single uniformly-sized pipeline can be laid from the Oman coast near Ra’s Al Jifan, crossing the Gulf of Oman and Arabian Sea to terminate at Gujarat

In the second, there will also be an Offshore Gas Compression Station, about 300 km from the Omani coast, on top of the Murray Ridge, which is around 3,000 metres in height

The second option proposes laying a dual-sized, single pipeline from the Oman coast near Ra’s Al Jifan to the Indian coast at Gujarat, via a Mid-line Re-compression Station situated on the Murray ridge

Jain added the consortium has been working on the geo-politically sensitive project for more than seven years. “Laying the pipeline is a two-year job. Getting the gas supply contracts and financing takes time. SBI Caps is our financial advisor,” Jain said.

Commenting on the IPI pipeline, Kameli said Iran is focusing on the Iran-Pakistan part of the project. New Delhi has not been participating in talks on IPI pipeline.

“Iran’s production is going to rise from the current 700 million cubic metre per day to over one billion cubic metre per day in three years. So, Iran will be a good and reliable supplier of natural gas to consuming nations like India,” Kameli said.

In a related development, ONGC Videsh managing director N K Verma refused to confirm recent reports on Iranian authorities having agreed to award a $3-billion contract for the development of the Farzad-B gas field in the Persian Gulf to India. “We have not yet heard anything on the matter from them,” Verma, who was also present in the event, said.

ONGC Videsh, the overseas investment arm of state-owned explorer Oil and Natural Gas Corp had earlier this year submitted a $10-billion integrated proposal to Iran for developing the gas field and shipping the gas to India. A consortium of OVL, Oil India and Indian Oil Corporation had discovered 12.8 trillion cubic feet of reserves in the gas field in the Farsi block in 2008.