NEW DELHI - India and Pakistan Wednesday announced several initiatives to accelerate cooperation in the oil and gas sector, as the two energy-starved nuclear-armed neighbors try to mend economic ties despite political differences.
Energy ministers from India and Pakistan said the two nations may jointly take part in developing a gas field in Turkmenistan.
In addition, India has proposed to export petroleum products to its South Asian neighbor, said Oil Minister Jaipal Reddy, while addressing a joint briefing with his Pakistani counterpart, Asim Hussain.
Hussain is in New Delhi for talks on a proposed 1,680-kilometer pipeline which will transport gas from Turkmenistan's Yolotan-Osman field to India and Pakistan through Afghanistan.
"We intend to have a joint strategy on the upstream sector where Turkmenistan is to develop its gas field," Hussain said.
"We will have to wait for the response of the Turkmenistan government," Reddy said. "Since everything is progressing smoothly, we are optimistic about it."
An agreement to build a Turkmenistan-Afghanistan-Pakistan-India pipeline will help both India and Pakistan secure gas supplies and also benefit Turkmenistan, which has the world's fourth-largest gas reserves including the Yolotan-Osman Gas field with estimated reserves of up to 13 trillion cubic meters.
The $7.6 billion proposed pipeline could carry about 90 million standard cubic meters of gas per day. According to the plan, Afghanistan would get 14 MMSCMD of the gas, while India and Pakistan would equally share the balance.
Discussions on the pipeline have been continuing for about two decades and the project has U.S. backing as it will provide millions of dollars to Afghanistan in the form of transit fee and also job opportunities. The pipeline will also reduce South Asia's dependence on Iran, which has been seeking to supply gas to India and Pakistan through another proposed pipeline.
About 1,535 kilometers of the Turkmenistan pipeline will pass through Afghanistan and Pakistan, including the Kandahar province that has high Taliban presence, and tribal areas, posing a security challenge to the project.
Hussain said Pakistan is separately going ahead with a multi-billion-dollar gas pipeline project with Iran. "The gas supply purchase agreement has been signed with Iran. We are meeting all schedules on time."
India, which was part of the project initially, isn't actively pursuing it as the talks stalled on security and pricing issues. Reddy declined comment on India's participation.
Pakistan's comments come as the U.S. and the European Union push toward banning or discouraging Iranian oil trade as part of efforts to force Tehran into suspending its alleged nuclear weapons program.
Reddy said India has offered to export gasoline, diesel, jet fuel and fuel oil besides sulphur, polyethylene and polypropylene to Pakistan, according to an Indian government statement. It said Pakistan will save freight costs as several Indian refineries are located close to the border between the countries.
Indian refiners will study the feasibility of product pipelines to Pakistan provided they receive long-term guarantees for product purchases, Reddy added.
Copyright (c) 2012 Dow Jones & Company, Inc.
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