Myanmar-Bangladesh-India gas pipeline

June 18, 2013: INDIAN commerce and Industry Minister Anand Sharma recently led a delegation to Myanmar to revive the Myanmar-India gas pipeline project. According to the Times of India (June 7), he discussed the possibility of setting up the pipeline along a land route, bypassing Bangladesh, to benefit the underdeveloped regions of both northern Myanmar and the north-eastern states of India.

According to bdnews24 (June 6), the Indian minister proposed to revive an old proposal to set up a gas pipeline from Myanmar’s western coast to eastern India through Bangladesh. Without any official announcement from any quarter, it is difficult to confirm which version of the news is true.

 

It may be recalled that India proposed to build the gas pipeline through Bangladesh in 2004 but it did not materialise because Bangladesh finally refused to cooperate. It is reported that India later attempted to build the pipeline through the troubled north-eastern states to supply gas to Paschmibanga but abandoned the idea due to economic reasons and security concerns.

 

The net beneficiary of the failure of the Myanmar-Bangladesh-India pipeline project was China. Myanmar waited for some time but later signed contracts with China to build not only a gas pipeline but also an oil pipeline along the same route. While the gas pipeline will transmit 12 billion cubic metres of natural gas annually from western Myanmar, the oil pipeline will transport crude oil from the Middle East to China bypassing the US controlled narrow strait between Malaysia and Sumatra through which about 80% of the country’s total oil imports now pass.

 

The 800-km pipelines costing $2.5 billion are almost ready. Natural gas from the off-shore reserves is due to flow from July 1. The oil pipeline is 97% complete.

 

It may be mentioned here that China is planning to have an access to the Bay of Bengal by both road and rail links through Myanmar. To many observers, it is like discovering a “western coast” for China! Bangladesh too tried to offer similar facilities to China but the effort did not materialise.

 

It is difficult to comprehend why Bangladesh rejected the Indian proposal in 2005. The estimated cost of the project was $1 billion, most of which would have been borne by India. In addition to receiving $125 million annually as transit fees, Bangladesh had the option of sharing the gas with India.

 

It is probable that Bangladesh had a false notion of “floating over gas” at that time. It was also planning to export gas to India. The government failed to correctly assess the gas reserves of Bangladesh and appreciate the technical and economic merit of the gas pipeline project. Had Bangladesh agreed to the proposal on the basis of sharing gas from Myanmar with India, we could perhaps avoid a major power crisis in Bangladesh and save thousands of crores of Taka which we have been paying every year now as subsidies for expensive oil-based rental power.

 

By the way, this was not the only occasion when Bangladesh made similar mistakes. We foolishly rejected a free offer of linking the country with the global information superhighway in 1990s. Bangladesh later signed an agreement with 12 other countries in 2004 at a cost of Tk.628 crore for installing the submarine cable. The earlier rejection not only cost us a huge amount of money but also delayed and restrained the growth of telecommunication and outsourcing services in Bangladesh. It shows how often we fail to strike while the iron is hot.

 

Failing to import inexpensive natural gas from a neighbouring country having a common border with Bangladesh, we are now planning to import expensive LNG and dirty coal to fuel our power plants. It may be mentioned here that even hostile neighbours like India and Pakistan joined hands last year to build a 1,735-kilometre pipeline over Afghanistan to bring 33 billion cubic metres of natural gas annually from Turkmenistan.

 

The reported proposal to revive the Myanmar-Bangladesh-India gas pipeline is most encouraging. If India so desires, it is possible to serve the north-eastern states of India, Bangladesh and eastern India by the same gas pipeline. There are, however, doubts whether Myanmar would have enough gas left for export after meeting the demands of China and Thailand to whom Myanmar also supplies gas.

 

According the CIA Factbook, Myanmar has a proven reserve of 283 billion cubic metre and an annual production of 12 billion cubic metre. Its annual production is likely to double when China receives its full quota. If local consumption increases at the same time, the proven reserves of Myanmar are unlikely to last more than a decade.

 

The good news is that there had been very little exploration of gas and oil in Myanmar during the last two decades due to UN imposed sanctions which were lifted only recently. Several major oil companies of the world, including some from India, are now investing heavily in both onshore and offshore exploration for hydrocarbons in Myanmar.

 

Many experts predict a dramatic rise in hydrocarbon reserves of the country in the near future. Moreover, the Indian oil companies with interests in exploration in Myanmar are in favour of exporting gas to India.

 

Taking these factors into consideration, the prospect of building the Myanmar-Bangladesh-India gas pipeline appears to be promising. Both Bangladesh and India should, therefore, take the proposal seriously and try to implement it as early as possible.

 

The Daily Star