INTERVIEW BY OFFSHORE WORLD MAGAZINE ON OMAN INDIA MULTI PURPOSE PIPELINE With DR. AJAY KUMAR, CHAIRMAN&MANAGING DIRECTOR FOX PETRoLEUM GROUP

Qns.1 In past, a lot of transnational pipeline projects like TAPI, IPI, etc has proposed but still any of the project is not seen any success so far. According to you, how important it is to implement these kind transnational gas pipeline projects for India’s energy security point of view?

Ans.  Yes, You are right, these all were talked not seen; There was only hurdle to do it whosever has planned the “NOC” to go ahead on the subject; Besides that, it becomes the tool to settle the geopolitical score; Let me not confuse you, must explain in my capacity and knowledge, what Geopolitics is in this case; Geopolitics,” meant “the cram of how factors such as geography and economics influence politics and relations between nations.”  Now it means politics among (not just between) nations and rivalries for international power.  A geopolitically successful nation delivers on promises to allies and threats to rivals — or loses allies and strengthens rivals. And, earlier weapon was Crude Oil now an added weapon to settle the score is LNG between the Countries; The failure of some of them was due to the Geopolitics in the region; You will get LNG supply if you are in good books of the supplier country and the banking channels are open;

The second most viable reason is – Security of the pipeline & regional instability has long haunted the Turkmenistan, Afghanistan, Pakistan, and India (TAPI) project, first conceived 18 years ago, and that remains the main obstacle to the pipeline becoming a reality.

Third most and very important reason is –which has not been discussed anytime anywhere, who will finance the project; One Country or the Consortium of Countries who are going to be benefitted with this pipeline; So, far I am sure, it was burden on one Country, that was the major cause for non implementation on the ground;

As far as my Country is concerned and the knowledge I have,  I can say, if TAPI comes with full fledged role to supply LNG to gas hungry energy market of India, no dought it will make India – “NO DARK ZONE” as well as “FATTEN THE ECONOMY”. As you know carrying LNG thru pipeline is less costly then ships; If TAPI would have conceived, it would have given a reliability and stability in energy market – because then we could have been depend on – Turkmenistan’s 618.1 trillion cubic feet of proven natural gas reserves and as well as Iran’s 1,187.3 trillion cubic feet of proven natural gas reserves;

Qns. Can you please apprise us the detail plans like funding, foresee project duration & cost, technology feature, consortium, sourcing & reaching points, landed cost of LNG, etc of the Oman–India Multi-Purpose Pipeline (OIMPP) proposed by Fox petroleum?

Ans.  We at Fox Petroleum Group, has plans to build the Oman –to- India Deepwater Multi Purpose Pipeline (OIMPP), a deepwater transnational, natural gas pipeline system that will cross the Arabian Sea. The OIMPP is anticipated to be the first of many in a corridor of pipelines that will form the final leg of a major energy supply route linking the two countries crossing the sea; Importing LNG is a rather costly process, but unavoidable because the sources of gas are far away. This cost can be avoided if gas is imported through pipelines and then transported across the country through existing and future-planned pipelines in India.

In the last few years, deep sea gas pipeline technology has matured. Since India has serious security concerns with regard to pipeline projects over land, a deep sea pipeline is probably the most promising option. OIMPP will be 1609 KM Aprox. The project intends to transport 8 tcft (trillion cubic feet) of natural gas to India over a period of 20 years. The pipeline is planned to be about aprox 1,300 km long in phase I and 300 Km more to connect Mumbai, laid at a max depth of 3,400 to 3500 metres below

the seabed. It will connect onshore the Middle East Compression Station near Oman with the receiving terminal near Porbander, Gujarat. The estimated cost of this project is $5-5.6 billion and can be executed in about max to max five years.

Geographically, the Oman-India Pipeline is comparatively more feasible because India is close to the sources of natural gas in the Middle East and the undersea distance is less than 1,300 km if connected to Gujarat coast only . Another reason in favour of this project is the landed cost at Oman Point, which will be lesser by $1.5 to $2 per million BTU as compared to LNG imports. Furthermore, this pipeline could be linked to other natural gas sources in the Middle East and even to Turkmenistan and Iran if need be. A single uniformly sized pipeline from the Oman coast near Al Duqam near to Ra’s Al Jifan to the Indian coast at Porbander, Gujarat.

Considering the fact that known sources of natural gas in India till date is just 1.33 trillion cubic metres, India will need to source a major portion of natural gas supply from outside to meet the rising demand. The government will need to make planned efforts to find a lasting solution to the problem. The sooner the government takes a serious view on the proposal, the better it will be in the interest of the country to ensure its energy security.

A boom in LNG demand and projects is taking shape in India. Demand for natural gas, mainly from new power generation projects, fertilizer plants, and industrial users, is projected to soar in the world's second most populous nation. Its paltry domestic output of natural gas mandates that India must import natural gas to meet it expected explosive growth in demand for the fuel. While pipeline imports might seem a logical choice, this is a problematic alternative. Hence, Oman-India Multi-Purpose Pipeline can solve the energy demand in wholesale for next 25-30 Years; According to the U.S. Energy Information Administration, this shortfall is expected to rise dramatically by 2020 and continue rising through 2030, when it will peak at 3.56 billion cubic feet per day.

Final proposed route map of OIMPP as decided by our team and it is a dual sized, single, pipeline from the Oman coast near Ra’s Al Jifan will be linked to DUQAM onshore and  from Al DUQAM  to the Indian coast at Gujarat; You will see the - Impact of the Line Oman–India – Multi-Purpose Pipeline on India – “It will be a known as GAS HIGHWAY, and will make India ‘No Dark Zone’”.

For the implementation, we have undergone thru vast study, we have thought about four possible cases of laying the pipeline with calculation the CAPEX and OPEX of the project; But finally, still we are planning to go by our costlier plan i.e. Plan – A (Excluding the plan B,C,D); Plan A- High Pressure (Dense Phase) :This 42 inch (1067 mm) OD pipeline is a single compressor station configuration. The pipeline inlet pressure is in the dense phase zone. After processing and passing through the first stage scrubber, the lean gas  pressure is raised from 4.24 to 9.122 MPa (615 to 1323 Psia), then cooled to 37.8 ˚C (100 ˚F). The gas is compressed further in the second stage to 19.623 MPa (2846 Psia). The high pressure compressed gas is cooled back to 37.8 ˚C (100 ˚F) and then passed through a separator before entering the long pipeline. And the CAPEX of this will be : USD $ 5165.95 Million Dollar plus Power station cost for 105.7 MW + all other sub station cost : USD $ 238 Million Dollar along with ±5% of the project cost i.e USD $5.6 Billion Dollars Approx;

We assure and ensure you that project will never get shortage of finances and material to be used in this project; The project worth calculated is USD $ 5.6 Billion with ± 5%; We have arrangements of funds to follow the project in timely manner and at targeted date; We will not expect any subsidy from the Government of The Sultanate of Oman as well as Government of the Republic of India for this project and we will abide and follow all norms as a general company rules; And, most likely, we will not take any loan from any Indian Private or Public Sector Banks; That means, it will be funded from our associate companies world wide against their Oil Collateral and foreign lenders like banks have also agreed in principally to fund the project, which has been arranged with back up of funding one and back up funding two, that is same amount from two more sources against the reserves of petroleum products;

 Qns. How do you compare this deepwater pipeline with other onshore pipelines like TAPI & IPI?

 Ans. Hassel free, safe and secure; The two country has to give approval and Arabian Ocean and Fox Petroleum are the third party to this project;  

Qns. While SAGE group had proposed the same kind of deepwater transnational pipeline from Middle East to India, how do you think the OIMPP is more feasible option?

Ans. We have nothing to say what other’s are doing, it will be great if we can have 15 Pipeline in Arabian Ocean to Connect Oman and India; But, we are going to use our HEAD and HUT (i.e. Brain and Life’s all secured and unsecured assets) to complete this project; This makes it different from other’s; I want to do it, because I wanted to be named THE NUMBER ONE LOVER OF MY NATION; I love my India and YOU=The Indians, that has forced me to think about it;

Qns. What is the technology aspect of this deep-sea pipeline project, while India has lack the ability of deepwater pipeline technology?

Ans. We are going to use – Foreign Companies for this  – like we have planned to give contract of supply to European & Chinese Companies for Pipe supply; We have a plan to use Two Onshore Pipeline Companies for two coasts; And two Offshore for both side shelf level laying and three in deep water; And a separate company will be used for power and compression station; So, now you can say we will deliver the world if given an opportunity – THE GAS HIGHWAY;

Qns. Indian is now more serious on transnational pipeline projects whether it is onshore or offshore. Do you think the new government has plans to encourage such kind of projects? What kind of response so far from the government towards the OIMPP?  

Ans. We have visited the petroleum ministry and we have been said work hard; But we have written letter to Petroleum Minister of Oman and met Ambassador of Oman in India and updated the status and our plan;

Qns. How will the proposed pipeline project will open doors for India in sourcing crude or natural gas from other gas-rich producers of the Gulf, Middle East and potentially Central Asia?

Ans. India can tap at least permanent solution of gas; That much I can say now; The cost to transport crude oil or petroleum products by pipeline is a fraction of the cost of other modes of transportation. The cost to ship crude oil by rail is generally $10 to $15 per barrel versus under $5 per barrel by pipeline.  LNG Transportation cost fixed $1.5/MMBtu that is too cheap to control the price; as per Indian requirement of USD $ 8.0/MMBtu; We will transport, other petroleum gases from the same pipeline as per calender booking of the year; Project will have 8 Contractors working at one time; For Onshore Two Contractors; For SHELF level Offshore Two Contractors; Two Contractors for Deepwater Pipeline laying; And One for Onshore Project Management Consultant and One for Offshore Project Management Consultant; And one for Power and Compression Station in addition; Oman Government is enthusiastic as per the sourced information, but waiting for the approval of Government of India for a “YES”.  

GEOPOLITICAL IMPACT OF IRAN’S NUCLEAR PROLIFERATION ON OIL & GAS MARKET

The Oman’s relations with Iran will boost the economy of Iran by some numbers in GDP; In fact, Oman Government has played a good amount of role in The historic deal between Iran and Global powers without taking any credit in the world i.e. Actually, the historic nuclear accord between Iran and the international community unveiled in Vienna last Tuesday that will stop it from making a nuclear weapon and lift the sanctions on the country — is likely to be positive for Iran to become the middle east new power center, shifting partial US interest from Israel, Kuwait & Saudi Arabia and it is positive for Oman & India and companies here. Iran’s fiancés working capital will improve due to Gas Agreement with both Countries like Oman & India  and at the same time India's finances will improve because of a possible drop in oil prices and easier and cheaper availability of Crude Oil & Gas for India with effect on the rupee may become less volatile even as the US Federal Reserve gears up to tighten monetary policy. But on India side various Indian companies with business links to Iran, which has the world's fourth-largest oil reserve and second-largest gas reserves may get cheer up node too; In anticipation of the deal and its likely impact on crude prices the share prices of Indian public sector oil marketing companies witnessed a jump in its share prices and so far as I know, like the American Companies will make first move, and already they have prepared their mind for expansion with already existing roots of their Companies in middle east towards Iran Oil & Gas Business;

History of the deal is of 23 months old and Oman’s plan to Build Oman Iran Pipeline is almost that old in place, but since last week's State of the Union Address, President Obama threatened to veto new legislation affecting five issues sealed the deal of Iran, four of them in the domestic policy arena and just one covering foreign policy. The foreign policy issue in question involved the prospect of new sanctions legislation targeting Iran. Correspondingly, the administration has recently ramped up efforts to conclude a nuclear deal with Iran.  Should the United States and its partners in the P5+1 -- Britain, China, France, Russia, and Germany -- strike a deal with Iran, the global oil and gas markets would no doubt be affected. Indeed, several leading oil and gas companies are already preparing for a return to business in Iran in the event sanctions are lifted. Such jockeying would only intensify once the Iranian oil and gas sector became fully available to international markets. And after 23 months of negotiations Iran finally entered into a historic nuclear deal with six world powers that paves the way for ending sanctions imposed by the US and Europe and also opens business prospects for the various countries including India in Iran. This is also expected to further lift the supply of crude oil in the global market that in turn will keep the oil prices lower. But the entry of India will upset China, this deal has made China upset, and it will go closer to Russia. Chinese companies were working during the sanctions on Iran but with monopoly. It will block China’s aggression in energy market interest of Middle East. But already made investment will make the first beneficiary of profit; At the same time, India is also making a renewed pitch for rights to develop 12.8 trillion cubic feet of gas reserves that ONGC Videsh had discovered in 2008.

This deal is not uniform, it is good for America and Europe, fruitful for India and difficult for Saudi Arabia, Kuwait & Israel to digest the USA breakfast in Iran;  Fear is that - most immediately, lifted sanctions on Iran's oil and gas industry could shoot tensions with other energy producers, such as Russia, Saudi Arabia, and Qatar. It is going to make bad impact on Oil Price, Europe dependency on Russian Oil & Gas; And cheap Gas from Iran will impact Qatarisation of LNG;  The sinking oil prices will sink more, but will make a profitable monetary rain in Iran, it will be huge for them to come up from dry to flood;

But it is not easy to come up from Iran to pre sanction level of Oil Production; Just to remember, when in mid-2012, sanctions were imposed against Iran's oil exports, precipitating a drop from 2.5 million exported barrels a day to close to 1.4 million a day. If sanctions were lifted now, Iran might need a full year to bring its production to pre-sanctions levels will impact CRUDE OIL PRICE to USD $38-42/BBL but it will start impacting from the next financial year with huge drop and rain in stock exchange; Moreover, given current market conditions, only limited international investment will likely be available to help restart its production where the mjor players as buyer will be India and China. For one thing, Iran has not offered particularly attractive terms to investors, and at today's oil prices, investors are cutting back everywhere. Such realities cast major doubt on Iranian Oil Minister Bijan Zanganeh's recent claim that if sanctions were to end, "Iran will double its oil exports within two months." So, far Iran’s Oil Minister’s statement can be analysed in different sense, The minister didn’t say – it will double its production, rather the meaning is double the export, and it is due to already explored and stored and bunkered Crude Oil I Iran;

However, the announcement alone of an agreement with Iran that removes international sanctions would accelerate the current steady downward trend of the global oil price for some days or may be 150 days. Thus, the oil price would be affected even before increased physical supplies of Iranian oil reached the market. And more oil would gradually return to the market, helping keep global oil prices low and perhaps depressing them even further. Burdened by sanctions, Tehran has offered discounts to regular buyers such as China, India, Japan, South Korea, and Turkey. The end of sanctions would most likely mean that such consumers would pay a price more in line with global prices. Accordingly, this could create an opportunity for Saudi Arabia and other Gulf producers to increase their market share. This may happen too; Those are not willing to go with Iran due to diplomatic crisis between them has to go with Saudi Arabia and with further more recent prices;

IMPACT AND ASPECT IN NATURAL GAS, as we know the Russian Gas is the major source of energy development in Europe; As we know the Russia-Ukraine crisis erupted last year, Tehran has tried to position itself as a reliable alternative to Russia as a gas supplier to Europe and there American interest was quite vital to go with Iran side. Indeed, Iran is the only state close to Europe's borders that possesses enough natural gas to rival Russia's dominance in most European gas markets. Iranian president Hassan Rouhani even stated recently that "Iran can be a secure energy center for Europe" whereas America due to policy hurdle was not able to keep happy the European partners with Gas Supply;  And Iran's Deputy Oil Minister Ali Majedi, boasted in official Iranian media that "Iranian natural gas is Russia's only competitor for Europe." He continued that European countries could import Iran's gas through three separate routes: Turkey, Iraq, or a pipeline running through Armenia and Georgia, and then under the Black Sea. The idea of Iran as a future alternative gas supplier for Europe is acknowledged by European officials as part of their recent drive to lessen dependence on Russian imports. In April, the EU's foreign policy arm -- the Directorate-General for External Policies -- published a study of the EU's natural gas import options in light of the Ukraine crisis and concluded that "Iran is a credible alternative to Russia." However trustworthy an option Iran might be for supplying Europe, two major and main obstacles would dawdling Iran's entry into Europe's gas markets are one, the need to produce more gas and, two, the need to build infrastructure to get it to Europe. To be sure, Iran is a significant natural gas producer, generating 160 billion cubic meters a year, third globally behind just Russia and the United States. Its output constitutes about 35 percent of annual EU gas consumption. Iran also has vast reserves.

The very much interestingly, Iran is a net gas importer, with the country consuming a larger proportion of natural gas than any other country in the world. Iran's high natural gas consumption rate is due in part to its very low domestic gas prices and thus low energy efficiency. Iran imports gas from Turkmenistan and Azerbaijan, while it exports a bit less to Turkey and Armenia. In Turkey, energy industry sources have reported that Ankara is preparing its pipeline infrastructure to enable transit of Iranian gas to Europe once sanctions are removed and Oman and Iran signs the pipeline contract since last some months ago, and another private party who has proposed OMAN INDIA PIPELINE with 100% private investment, widely known as “THE GAS HIGHWAY” will be for India. Thou Pipleine it will take time but the production of Crude & Gas to make available in the market will also be taking time and investment, so both side will be hurry; More agreements to follow in news with many views in near furure; 

THE FIGHT IS ON not WAR; I mean the diplomatic fight will take place to make or break friends; Concluding the geopolitical impact, by lifting of sanctions on the Iranian oil and gas industry would have a number of geopolitical ramifications. Regarding the export of oil in particular, the strongest effect would undoubtedly be heightened tensions with Saudi Arabia, including on OPEC policy. Recently, Iranian president Rouhani explicitly criticized Saudi Arabia for what he views as Riyadh's intentional policy to keep oil prices low and threatened that "[the Saudis] will suffer." On gas, Russia would take steps to block Tehran's entry into European markets, as it has done in the past. In 2007, when Tehran inaugurated gas supplies to neighboring Armenia, Russia's Gazprom immediately bought up the pipeline project within Armenia and built it with a small circumference to preempt its future use for transiting gas to European markets.

We will see huge competition between Moscow and Tehran, could also find themselves competing for gas market share in neighboring Turkey. Already Russia's second largest gas export market, Turkey's role in Russia's gas export strategy has recently grown with Russia's proposed route change of the South Stream export pipeline from Bulgaria to Turkey. Largely, cooperation between Russia and Iran rests on a shaky basis, and once Iran is released from sanctions and its conflict with the West, many subjects of strategic competition between Tehran and Moscow will break the surface, including in the sphere of gas markets. Additional potential conflict that may emerge once sanctions are removed and Iran's natural gas industry revives is with Qatar over the delimitation of their shared South Pars/North Dome field. This natural gas field is one of the world's largest and the main source of Qatar's massive LNG exports as well as the main area where Iran has been investing in new gas and oil capacity. Conflict between Doha and Tehran over delimitation has been anticipated somewhat by sanctions and the corresponding lack of investment in Iranian production in the contested field.

Finally, the USA and its partners from Europe can reach a deal with Iran, but all players must realize the latent consequences of Iran's reentry into the global oil and provincial gas market. Most immediately, tensions could gush with other energy producers, such as Russia, Saudi Arabia, and Qatar. The downward spiral of global oil prices would also be reinforced. Tehran, it must be noted, could face serious difficulties finding markets for expanded output and attracting the needed investment in production and gas transit facilities. But in the long term, expanded Iranian output could create more supply options for European and Asian gas markets.

THE Lifting of the sanction from IRAN will give many relations and possible good number of enemies as equals to The United States; But business will go on; I feel, it is good deal for Iran and its future of economy, and at the same time, a partial profitable beneficiary will be Oman & India.

************************