State-run gas utility GAIL India today said it plans to take 4.17 per cent stake in the $2.01-billion gas pipeline that China is building in Myanmar to transport natural gas found off the Myanmar coast.
"Our board has approved a proposal to take stake in the pipeline that will transport gas from offshore block A-1 and A-3 to China," GAIL Chairman and Managing Director B C Tripathi told reporters here.
The board of ONGC Videsh (OVL), the overseas investment arm of Oil and Natural Gas Corporation (ONGC), has also approved taking 8.35 per cent stake in the pipeline.
"The stake is subject to government approval," he said adding the proposal needs approval of the Cabinet Committee on Economic Affairs (CCEA).
OVL and GAIL will together invest $251.2 million in the 870-km pipeline China National Petroleum Corp is laying to take A-1 and A-3 gas to mainland China.
Tripathi said CNPC had offered 49.9 per cent stake to the consortium developing gas fields in blocks A-1 and A-3.
South Korea's Daewoo Corp holds 51 per cent stake each in block A-1 and A-3 while OVL has 17 per cent stake. GAIL and Korea Gas Corp have 8.5 per cent each while the remaining 15 per cent is with Myanmar's Myanma Oil and Gas Enterprise (MOGE).
The consortium is investing $3.61 billion in bringing to production gas fields in the two blocks.
Daewoo too was inclined to participate in the 40-inch pipeline and final shareholding in the pipeline project would be CNPC - 50.9 per cent, MOGE- 7.37 per cent, Daewoo- 25.04 per cent, OVL - 8.35 per cent, GAIL and KOGAS-4.17 per cent each.
Gas from A-1 and A-3 would be sold to China for $7.72 per million British thermal unit (mBtu) at the landfall point in Myanmar.
Daewoo-OVL-GAIL-KOGAS would invest $2.79 billion in three gas fields in block A-1 and A-3 off the Myanmar coast and another $936.26 million in laying an under-sea pipeline to take the gas to the shore, sources said.
Sources said Shwe and Shwe Phyu gas fields in Block A-1 and Mya discovery in block A-3 would be tied together to produce a plateau of 500 million standard cubic feet per day of gas for 19 years. The field life is envisaged for 28 years.
First gas is anticipated in the first quarter of 2013, they said.
Myanmar has decided that the gas from A-1 and A-3 would go to China. CNPC will pay $6.71 per mBtu for the gas plus an offshore pipeline tariff of $1.02 per mBtu. The 30 year sale contract is indexed to US inflation, sources said.
Sources said the gas in A-1 and A-3 is lean (99 per cent methane) with less impurities.
Gas reserves of 4.532 Trillion cubic feet (Tcf) in blocks A-1 and A-3 have been certified.
