Four countries ink deal for $10 billion TAPI gas pipeline project

Published: March 4, 2016
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A gas sales and purchase agreement had been signed in 2013 that set the pricing mechanism under which gas price at the Turkmenistan border would be around 20% lower than the Brent crude price. PHOTO: FILE

A gas sales and purchase agreement had been signed in 2013 that set the pricing mechanism under which gas price at the Turkmenistan border would be around 20% lower than the Brent crude price. PHOTO: FILE

ISLAMABAD: 

The four nations that are part of the $10-billion Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project have signed an initial investment agreement, a move that will clear the way for updating the feasibility study and finalising the pipeline route in Afghanistan.

The agreement was inked by representatives of the four nations and the Tapi Pipeline Project Company in Istanbul last month.

Iran-Pakistan gas pipeline under shadow of politics

They had already registered the company in November 2014 in which Afghanistan, Pakistan and India would have 5% shareholding each and the remaining 85% stake would be held by Turkmenistan.

The investment agreement pertains to the 5% shareholding of each of the three gas-importing countries, which means an initial investment of around $200 million.

“We have initialed an investment agreement in Istanbul and the final deal will be signed soon,” Interstate Gas Systems Managing Director Mobin Saulat told The Express Tribune.

Pakistan would contribute 5% of the financing for different activities of the project, he said.

Leaders of the four countries performed the groundbreaking of Tapi pipeline in December last year, a scheme aimed at easing the energy deficit in South Asia.

The Tapi pipeline, also dubbed the peace pipeline, is expected to bring peace and stability in the region in the wake of regional cooperation as Afghanistan, Pakistan and India will be depending on each other. It will also connect South Asia and Central Asia.

“We are currently working on three pipelines including a liquefied natural gas (LNG) pipeline from Gwadar, Tapi and the North-South LNG pipeline,” Saulat said, adding the Tapi project was expected to be completed by the end of 2019.

PM inaugurates TAPI gas pipeline project in Turkmenistan

He said Pakistan was facing gas shortages and the project would help ease energy crisis in the country.

The government is working on three gas import programmes which will bring about 4 billion cubic feet of gas per day (bcfd). This includes 1.325 bcfd from Tapi, about 750 million cubic feet per day (mmcfd) from the Iran-Pakistan pipeline and about 2 bcfd from LNG imports.

At present, Pakistan produces 4 bcfd of gas against demand for 6 bcfd. For bridging the shortfall, the government has signed a long-term LNG deal with Qatar. First vessel under the agreement reached Pakistan earlier this week.

Turkmenistan will make an investment of around $25 billion to deliver around 3.2 bcfd of gas to three energy-hungry countries – Afghanistan, Pakistan and India – by December 2019 for 25 years.

Of the total, $15 billion will be poured into developing the gas field whereas $10 billion will be spent on laying a 1,680km-long pipeline.

A gas sales and purchase agreement had been signed in 2013 that set the pricing mechanism under which gas price at the Turkmenistan border would be around 20% lower than the Brent crude price.

At the present rate of crude oil, the Tapi gas will cost around $3.2 per million British thermal units, which will rise to $6.5 per unit after including the tolling tariff and transit fee to be paid to Afghanistan.

Afghanistan is estimated to receive about $500-600 million in transit fee from Pakistan and India and will ensure security of the pipeline. India will also pay about $250 million in transit fee to Pakistan.

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Pakistan and India will each receive 1.325 bcfd of gas while Afghanistan’s share has been set at 500 mmcfd, which will also be up for grabs either by Islamabad or Delhi if Kabul does not need it.

Turkmenistan is expected to achieve financial close for the project by December 2016 for developing the gas field and constructing the pipeline in three years – by December 2019.

Published in The Express Tribune, March 4th, 2016.

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Reader Comments (19)

  • jay
    Mar 4, 2016 - 1:06PM

    India should be a part of this, Logic says if Pakistan does anything to stop oil in time of war( although India never stopped water during any wars ) we can always stop water this time around. . Recommend

  • Prada
    Mar 4, 2016 - 1:45PM

    Don’t know how feasible this will really be given the fact that terrorism is still rampant. If the pipeline is blown up periodically, it won’t serve the purpose.Recommend

  • NHA
    Mar 4, 2016 - 4:09PM

    @jay: If that is the thinking, India better not join. It shows inherent Indian hostility to Pakistan. THis project will never see the light if such thinking persists on the Indian side. Recommend

  • Vectra
    Mar 4, 2016 - 4:25PM

    @jay:
    Why unnecessary….They will not and cannot stop as the TAPI is not their personal but an international consortium with 5% share each.Recommend

  • Ch. Allah Daad
    Mar 4, 2016 - 5:53PM

    Mian Sahib’s tireless efforts have stated to pay off. Thank you PML(N) government.Recommend

  • ramdar
    Mar 4, 2016 - 6:37PM

    @NHA:
    Mutual dependence helps to avoid misadventures. See it this way, if India stops water to Pakistan, Pakistan can stop oil to India. There is merit in Jay’s argument, though presented wrongly. Huge trade between China & India make either side avoid extreme positions. Recommend

  • SALIM HABIB
    Mar 4, 2016 - 7:26PM

    i think there should be more of such projects between the countries of the region as the history of europe has shown that whenever economic interests are intertwined the regional animosity changes to economic progress,but the politicians are very selfishly focussed and are the people who get us into the trouble of all kinds in the first place,they are worst than the other terrorist groups,as the politicians rule the world entirely.Recommend

  • Pakistani
    Mar 4, 2016 - 10:42PM

    @jay:
    India did not stopped water in war times, Yes because they stopped it in peace times 1st April 1948 and releases the same when they faces the floods in their areas taking the most advantage of upper riparian area. Recommend

  • Xnain
    Mar 4, 2016 - 10:43PM

    @jay:
    India didn’t stop water because she couldn’t. Try to be realistic. And yes Oil is more precious for the economy and war than water. I hope your brain possesses enough processing power to understand simple facts.Recommend

  • curious2
    Mar 4, 2016 - 11:14PM

    This has always been a great concept – but not necessarily practical given the political rivalries and militants roaming Afghan/Pakistan. When the big USA companies pulled out a difficult project became even more difficult – the project lost the glue that might have held it together.
    .
    Afghan will use this project as lever against Pakistan – Pakistan will use this as lever against India … and India won’t fulfill it’s obligations until Pakistan makes substantive changes in it’s use of strategic assets. The term complicated comes to mind.Recommend

  • Mar 4, 2016 - 11:24PM

    It will never work without Afghanistan stabilization. Afghan government just exist inside Kabul. Recommend

  • NHA
    Mar 4, 2016 - 11:43PM

    @ramdar: This very thinking on the part of India has kept South Asia in the state in which it is. Why not work for amity , instead of reinforcing enmity. Try to resolve conflicts so that you have to think negatively. Nations have long memories and injustices done are not forgotten easily. So far, South Asia has suffered at the hands of India. Recommend

  • RB
    Mar 5, 2016 - 2:12AM

    Folks it is GAS not OIL. Countries in the agreement are NOT dependent on only this supply. It will help them but if it is not there countries like India will not miss them either. As far as I know it will only contribute 5% of India’s needs.Recommend

  • Yasir Khan
    Mar 5, 2016 - 3:06AM

    @NHA:
    Good luck trying to convince the Indians. They are bred on a diet of hatred and bigotry. They will see zero sum or even negative sum in everything.Recommend

  • Indian
    Mar 5, 2016 - 4:43AM

    @NHA: Tell me a single country in South Asia who will stand for Pakistan instead of India. Even your immediate neighbours like Afghanistan and Iran will be with India. China, Saudi Arabia and UAE may help you indirectly but wont come in directly in support of you. Recommend

  • brar
    Mar 5, 2016 - 5:29AM

    @NHA: Are in senses Sartaz Aziz admitted Afgan Taliban are in Pakistan their families are in Pakistan OBL was also found in Pakistan all wars started by Pakistan and you say India kept south Asia in turmoil. the world is not blind.they know who the culprit is,Recommend

  • father time
    Mar 5, 2016 - 7:48AM

    At least we know how long it takes Pakistan to make a correct decision now. About 15 years. Recommend

  • NHA
    Mar 5, 2016 - 10:56AM

    @brar:

    India definitely will like to kill or want half of Afghan Pashtun population killed . It is pitty that Afghans Govt. is party to it But it is also a fact that both the Indians and Afghan Govt will not abe able to do this. A political proess to coopt and include Pushto speaking population in Afghan national life is necessary. Influences like India are detrimental to Afghan interests and weell being of people.

    Apparently Afghan Govt realises this now and has made overtures to go on this path. Wish them good luck. Recommend

  • jay
    Mar 5, 2016 - 6:21PM

    @Xnain:
    Why do you think we cant stop water . Google dams that India has built on the river that eventually cross to Pak. Indian dint stop water cause unlike Pak which bombs its own people we do care for Indian ( Pak) who have been brain washed by religion ! yeah now dont tell me u are an Arab ! lol. Recommend

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