The proposed Rs8,500-crore gas pipeline from Myanmar to India may never materialise as Yangon has concluded that its reserves in the offshore area where in block A-1 is located is not enough to meet the demand of an export pipeline to India, says a top official from Myanmar's energy ministry.

ONGC Videsh Ltd and GAIL together hold a 30-per cent stake, at four trillion cubic feet at A-1. GAIL has planned import of gas through a 1,573-km onland pipeline from Myanmar via the Mizoram and Assam in the North East to West Bengal and finally to Gaya in Bihar.

According to U Soe Myint, director general, ministry of energy, gas found in block A-1 and in its adjacent block A-3 will first be used to meet local demand in Myanmar and "if there is surplus, we will look at export options," he said.

He said Myanmar needed 200-300 million standard cubic feet per day (8.5 million standard cubic meters per day) of gas the volumes did not support multiple export options.

Myint said reserve estimates in A-3 would be known by second half of 2007 after completing an appraisal programme. Myanmar, he said, believes the blocks together hold an in-place reserve of 20 trillion cubic feet and can produce 2 billion cubic feet (56.6 million standard cubic meters per day) of gas for 25 years. "We need a third-party certification of reserves to establish our belief," he said.

UK-based Gaffney Cline and Associates has certified the `best` estimate of recoverable reserves at 18-million standard cubic meters per day, 40 per cent of volumes needed to support investment in a transnational pipeline.

Myint said Myanmar will decide on an export option by may this year after reserve certification.

Myanmar plans to tie-up volumes in block A-1 and A-3, which also has similar equity pattern as A-1, and explore development options - a pipeline to India, China or Thailand or Liquefied Natural Gas (LNG) to South Korea, Japan or India.

State-run Myanmar Oil and Gas Enterprise (MOGE) had last year called bids from possible importers of gas. After finding the bids for selling gas through a pipeline to either China, India or Thailand "unsatisfactory", it called for bids in December for selling 3.5-million tons per annum of LNG (14 mmscmd) from South Korean Daewoo-operated A-1 and A-3 blocks.

Daewoo is the operator of the blocks with 60-per cent stake while Korea`s Kogas has 10 per cent interest. India`s ONGC has 20 per cent and GAIL 10 per cent in the blocks.

In all 10 companies, mostly from China, Japan and Korea have put in bids. GAIL (India) Ltd has also bid but was informed that its bid was not the highest.

Marubeni of Japan and Kogas of Korea emerged as the top bidder for the LNG and if the ministry accepts the LNG bids, the Myanmar-India pipeline will never come.