Turkmenistan-Afghanistan-Pakistan-India (TAPI) has remained in the headlines for a while which, many energy experts believe, would cater to the high demand of the energy-starved India and Pakistan. Conceived in 1995 when an inaugural memorandum of understanding between the governments of Turkmenistan and Pakistan was signed, TAPI project has been hitting snags off and on largely because of war in Afghanistan.
But now, there is some forward movement on the project with the establishment of a company by the four state gas companies of Turkmenistan, Afghanistan, Pakistan, and India.The new entity, TAPI Pipeline Company, will build, own and operate the planned 1,800-kilometer (1,118 miles) TAPI natural gas pipeline. Turkmenistan’s State Concern “Turkmengas”, Afghan Gas Enterprise, Inter State Gas Systems (Private) Limited, and GAIL (India) Limited own equal shares of the company.
“Establishment of the TAPI pipeline company is a key milestone in the development of the pipeline. It is a tangible sign of transformational cooperation among the parties that presages the enhanced energy security, business prospects, and overall peace and stability in the region promised by the pipeline,” a news release quoted Klaus Gerhaeusser, Director General of ADB’s Central and West Asia Department, as saying.
ADB was appointed the transaction advisor for the TAPI gas pipeline project in November 2013. In that role, ADB advised on the establishment of the TAPI pipeline company as an integral part of the larger goal of identifying and selecting a commercial consortium leader to spearhead the construction and operation of the pipeline. When selected, the commercial consortium leader will take a substantial stake in the company.
French giant Total SA had initially shown interest in leading the consortium of national oil companies of the four nations in the TAPI project, but backed off after Turkmenistan refused to accept its condition of a stake in the gas field that will feed the pipeline. But now one India newspaper, Economic Times, reporting that India may propose getting a Chinese company to lead the consortium to complete the 10 billion dollars project. “The Chinese are less likely to insist on an upstream stake in this project as they are already present in Turkmenistan,” Economic Times quoted Indian government sources as saying.
The TAPI pipeline will export up to 33 billion cubic meters of natural gas a year from Turkmenistan to Afghanistan, Pakistan, and India over 30 years. Afghanistan, Pakistan and India will share the 90 million cubic meters gas every day with India and Pakistan getting 38 million cubic meters per day each while Afghanistan will get 14 million cubic meters per day. If the project goes ahead as planned, the pipeline could be completed by 2018.
Turkmenistan has the world’s fourth-largest proven gas reserves, and the pipeline will allow the landlocked country to diversify its gas export markets to the southeast. Turkmen gas in turn will provide a key new source of fuel for southern Afghanistan, Pakistan, and northern India.
The Manila-based Asian Development Bank is helping the four nations build a 56-inch diameter pipeline from Turkmenistan’s giant Galkynysh gasfield, with estimated reserves of 16 trillion cubic feet. From the field, the pipeline will run to Herat and Kandahar province of Afghanistan, before entering Pakistan. In Pakistan, it will reach Multan via Quetta before ending at Fazilka (Punjab) in India.
Pakistan is facing crippling energy crisis. The country’s drying natural gas resources is forcing the government to start its rationing to both domestic and industrial consumers during winters when gas demand peaks. The situation is not much different in neighboring India. New Delhi backed out of a similar trans-national gas pipeline project with Iran in recent months.
Pakistan, however, has hesitantly been trying to build a gas pipeline from Iran to bridge its yawning demand and supply gap. Iran has spent 500 million dollars to complete the pipeline on its side. Pakistan says international sanctions against Iran is stopping it from arranging financing for the project.
Financing aside, many in Pakistan are opposed to the pricing formula for the Iranian gas that was negotiated by the last government of former president Asif Ali Zardari’s Pakistan People’s Party and which favors Iran. Some Pakistani analysts see Saudi and American pressure at work in delaying the project, which both oppose the project.
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