Import power from the Gulf

Three years ago, I suggested in these columns that India should import electricity rather than gas from the Gulf. The logic of that has strengthened with the rise in oil prices, and technological improvements in undersea power cables.

The petroleum minister wants “conversations without commitments” with Pakistan about pipelines carrying natural gas from Iran and Turkmenistan through Pakistan. But our security experts will not allow our fuel supplies to be at the mercy of a perceived enemy.

Pakistan is very keen on the overland pipeline, precisely because of the security leverage it will give Islamabad.

However, there is a superior alternative. More than 80% of gas in India is used for producing power and fertilisers. The right approach is to produce these in the Gulf itself and import them directly, bypassing Pakistan. This will be cheaper, and avoid the security risks of a pipeline.

A gas pipeline from Iran would cost $3.5 billion if entirely overland, $4.8 billion if partly underwater to avoid Pakistani territory. The cost of a sub-sea power cable has not been worked out, but it would surely be far cheaper. Pakistan will charge at least 25 cents/mmbtu as transit charges for an overland pipeline. But a sub-sea cable in international waters will pay no transit fees.

An elementary principle of fuel economics is that transporting electricity is cheaper than transporting fuel. This is why large power stations are increasingly set up at coal pitheads, not consuming centres.

The same logic should apply to natural gas. Rather than pipe it to India, it should be converted into electricity in Iran and Qatar (the gas equivalents of coal pitheads) and then transmitted by sub-sea cable.

Currently, gas from the Gulf is being converted to liquefied natural gas (LNG) and transported by tankers to India, where it is regasified. This is expensive: the cost for Petronet is $ 4.15 per mmbtu.

Reliance has found offshore gas off the Andhra Pradesh coast, which can be delivered by pipeline. Reliance has offered to deliver this gas by pipeline to NTPC in Gujarat at just under $3 per mmbtu.

By contrast, the price of gas in the Gulf is just 50 to 60 cents/mmbtu. Clearly electricity produced there will be the cheapest.

This should be transmitted by cable to the western tip of Saurashtra, avoiding Pakistan’s marine exclusive economic zone.

The water depth on this route will exceed 3,000 metres. No pipeline has ever been laid at such depths. The technical and economic problems are formidable, and led to the scrapping of a proposed deep-water pipeline from Oman to India in the mid-1990s.

However, laying a power cable in deep water is much simpler and cheaper than laying a pipeline. Sub-sea cables are cheaper than even land cables in one respect: they do not need transmission towers.

Telecom cables have for long criss-crossed the Atlantic and Pacific oceans. They are proven systems, with very little maintenance requirements. For maintenance purposes, lifting a damaged cable out of the sea is far simpler than lifting a damaged pipeline.

A power cable is not a telecom cable. It will carry heavy power load, and should be able to transmit at a voltage of at least 400 KV to reduce transmission losses. These losses could be no more than 60 paise per unit over the 2,000 km from Iran to Gujarat.

This will be more than compensated for by the low cost of gas in the Gulf.

Is the technology available? Data from three major international suppliers — Pirelli, Nexans and ABB —- suggests that modern technology should indeed be able to devise a Gulf-Gujarat link. As the accompanying table shows, cables have already been laid at a depth of 1,000 metres in the Italy-Greece project of Pirelli, and at 540-570 metres in the Skaggerak (between Denmark and Sweden).

The maximum length so far is 303 km. in the Bass Straits (between Australia and Tasmania). Transmission voltage of 400-450 KV has been achieved in several projects. In terms of power generation, the biggest project in the table is 630 MW (Bass Straits).

A Gulf-Gujarat project would be far bigger than any of these. The water depth would exceed 3,000 metres. An Iran-Saurashtra cable might be 2,100 km long. Yet if telecom cables can be laid across the Atlantic and Pacific Oceans, why not power cables? If 630 MW can be generated and transmitted across the Bass Straits, why not 1,500-2,000 MW from Iran/Qatar to India?

The government should immediately initiate a detailed project study. Studies have already been made of gas pipelines from Iran. It is high time one was made for a sub-sea power link.

Cheap gas in the Gulf makes fertiliser production there far cheaper than in India. That explains why many Indian companies are investing in projects in the west Asia.

India’s own gas should be used increasingly for purposes other than power and fertilisers, such as petrochemicals. Increasingly, city transport should use compressed natural gas. Households should, in time, switch from LPG to piped natural gas.

Gas can replace fuel oil in many industrial furnaces. The switch will be that much faster if we can demonstrate that power from the Gulf will be cheaper than power from domestic gas.

What do you think?