While Pakistan and Iran are moving swiftly to give shape to the Iran-Pakistan pipeline in the face of American opposition, another gas pipeline project which enjoys the blessings of the United States has suffered a setback, according to media reports. The Turkmenistan-Afghanistan-Pakistan – India pipeline, known by its acronym, TAPI is a $ 9 billion venture which is designed as much to find a market for the Turkmenistan gas from Galkynysh field, better known as South Yoiotan Osman that holds gas reserves of 16 trillion cubic feet as to give a boost to post-war reconstruction in Afghanistan. It is also to be the alternative to Russian route for accessing and delivering Central Asian liquid gas and oil. Turkmenistan’s natural gas reserves are equal to those of Saudi Arabia and behind only Russia, Iran and Qatar.
Global companies like Exxon Mobil and Chevro are keen on combing on board the laying of 1680-km long pipeline are insisting on a stake in the gas fields which would be tapped for the venture. But Turkmenistan is opposed to the proposition. With no middle ground in sight, international companies are unwilling to take up the project on a build-operate basis. This is bad news to energy hungry India.
The recent road shows in New York, London and Singapore– to attract firms that can lay and operate met with little response, according to media reports. The road shows were organised by TAPI nations – Turkmenistan, Afghanistan, Pakistan and India. These four nations lack the financial muscle to undertake the venture.
Turkmenistan petroleum minister Kakageldy Abdullaev is however hopeful of a breakthrough. “We are in the process of choosing a consortium leader… The process of selection of leader of the consortium is on… Selection of consortium leader is not the sole responsibility of Turkmenistan. All four countries have to work together. Turkmenistan has proved that it has gas for the pipeline”, he was quoted as saying.
When completed, India and Pakistan would get 38 mcmd each, while the remaining 14 mcmd would be supplied to Afghanistan. The gas sale and purchase agreements have already been signed with Pakistan and India.
TAPI was conceived in the 1990s with the US company, Unocal, as the main champion. The American major even floated a consortium, the Central Asia Gas Pipeline Ltd (CentGas) in Aug 1966. Pakistan and Turkmenistan also signed a MoU. Taliban, which was in Kabul’s driver seat, came on board the project by signing an agreement to allow the pipeline through Afghanistan in Jan 1998. But seven months later TAPI went to the back burner following the bombing of American embassies in Nairobi and Dares-Salaam under the direction of Osama bin Laden.
TAPI plan saw a revival in 2005 after the Asian Development Bank (ADB) took the lead to push the venture. Yet not much progress came its way. One reason was the security concerns over southern Afghan stretch of the pipeline. This area bordering Pakistan’s lawless tribal belt is literally Taliban territory.
To address security concerns, the ADB feasibility study proposed two alternative routes in Afghanistan. One was through Taskepri in Turkmenistan to Shebarghan and then through Balakh, Mazar-i-Sharif, Samangan, Kabul and Jalalabad in Afghanistan, and Peshawar, Nowshera, Islamabad and Lahore in Pakistan to India. Another route was through Serhetabat, Shindand, Delaram, Kandahar, Quetta, Lora Lai, Dera Ghazi Khan and Multan and from there to Fazilka in India.
Gas price and transit fees also contributed to the delay. These issues were sorted by May, 2012.
The new thinking in Delhi and Ashgabat (capital of Turkmenistan) is that TAPI nations should float their own special purpose vehicle (SPV) to execute the project. The SPV may have $4 – $ 5 million equity from each of these four nations. Once the SPV is set up it will be its responsibility to scout for a consortium and ensure financial closure.
There are obvious advantages in a consortium led construction approach. Given the terrain through which the pipeline passes through before reaching Fazilka, the downstream country, India will not be susceptible to the vagaries of swings in Pakistan and Afghanistan.
If this thinking takes concrete shape, TAPI can become a reality by 2018, four years after the last deadline was breached.
–YAMAARAAR
