Gas Pipeline for Pakistan and India Studied

     Under the leadership of Prof. V.S. Arunachalam (EPP/Robotics/MSE), EPP researchers are exploring technical and policy options for a gas pipeline across Pakistan to India.  The investigators believe that such a pipeline holds attractive opportunities for infrastructural and economic growth in the two countries, as well as benefits for confidence building.  The system, designated TAPS (Trans Asia Pipeline System), would originate in one of the gas-rich nations in West or Central Asia, such as Turkmenistan, Iran, Qatar, or Oman, and would serve both Pakistan and India.  It would provide much needed gas at an affordable price to serve as fuel for power and feedstock for fertilizer and petrochemical industries. 
     It is difficult to overstate the importance of natural gas in economic development.  Globally, its growth over the coming years is expected to be double that of oil.  It is poised to become the primary commercial energy source for the world in the next century.  Natural gas is the predominant feedstock for petrochemical industries and for nitrogenous fertilizers, a commodity both Pakistan to India now import.  In addition, with the advent of highly efficient and inexpensive combined cycle gas turbines, natural gas is the overwhelming choice for new power generation capacity, subject to its availability. 
     India and Pakistan have modest indigenous gas reserves.  Their current consumption is around 20 Billion Cubic Meters (BCM) of natural gas per year.  Future demand is expected to be much higher than what their national resources could produce. 
     Preliminary studies at Carnegie Mellon show that sharing a pipeline would offer both countries significant economic benefits, while providing a valuable opportunity for techno- logical and economic cooperation. TAPS could provide Pakistan with approximately 10 BCM of gas per year, with approximately 15 BCM going on to India.  For India, the benefits would be plentiful gas in the western/northern region at a price at least 25% lower than LNG imported by ship. Pakistan would benefit from the substantial economies of scale available in such transmission pipelines, and would collect standard transit fees from India for the gas passing through Pakistan.  Pakistan would gain other benefits, including greater flexibility in its consumption over time, and the ability to enjoy economies of scale without full consumption levels.  Combined with transit fees, for an initial level of 10 BCM/year and Central Asia- supplied gas, Pakistan would be paying only about $750 million per year in gas charges, instead of the $1000 million it would have to spend if it built such a system alone.  By sharing the pipeline, Pakistan would also reduce its initial expenditure for laying the pipeline system.  The entire project is estimated to cost around $3-5 billion depending on the supplier nation.  Part of this cost, the segment from Pakistan to India, would be borne exclusively by India.  It is also likely that Pakistan could come to an agreement where its share of capital could be amortized through transit fees.  Having a partner in the pipeline increases investor security at least to the extent of knowing the existence of a very large market. 
     These are only the direct cost savings, and do not reflect the benefits of inexpensive gas.  Assuming that all of this gas were to be used for generation of electricity, 10 BCM/year could generate up to 7,500 MW of power.  Based on the current elasticity between power and economic growth, the Carnegie Mellon researchers estimate that this additional consumption would imply a double digit growth