Japan, China companies win contracts for TAPI project

They will develop a gas field and lay a pipeline in Turkmenistan

ISLAMABAD: Japan and China are emerging as leading players in developing a gas field and laying a pipeline in Turkmenistan that will bring gas for Afghanistan, Pakistan and India and meet their growing energy needs.

Earlier, a consortium of Japanese companies had been awarded a contract for developing the gas field in Turkmenistan in return for a service fee. Now, a Chinese company has got a contract for laying the pipeline over 300 kilometres in the territory of Turkmenistan, says a senior government official.



Several other companies including Russian and European firms were in the race to win the contract but the Chinese company got success in the tender floated by Turkmenistan.

“Pipeline contracts in Afghanistan and Pakistan will also be awarded by Tapi company under the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project,” the official said.

The company, set up by the four countries that are part of the project, will run and maintain the pipeline whereas Pakistan, Afghanistan and India will pay a tolling fee.

According to the official, Tapi company is working on arranging finances and has told Pakistan government that it is planning to hold road shows around the world to raise funds for building the transnational pipeline.

Turkmenistan government has 85% shareholding in Tapi company, therefore it will arrange a major part of the financing.

The official said the consortium of Japanese companies was working to develop the gas field in Turkmenistan, which needed an investment of $15 billion. “The Japanese are also providing the investment funds.”



Turkmenistan, Afghanistan, Pakistan and India have signed an initial investment agreement for the $10-billion Tapi pipeline in a bid to kick off work, update the feasibility study and finalise a pipeline route in Afghanistan.

Leaders of the four countries performed the ground-breaking of the project in December last year, which would help ease energy deficit in South Asia.

With the title of peace pipeline, the Tapi project is expected to bring peace and stability in the region because of cooperation among regional countries and reliance on each other for meeting energy needs. The pipeline will connect South and Central Asia.

Turkmenistan will invest around $25 billion to deliver 3.2 billion cubic feet of gas per day (bcfd) to energy-hungry Afghanistan, Pakistan and India by December 2019, which will continue for 25 years.

Of the total, $15 billion will be invested in developing the gas field whereas $10 billion will be poured into laying the pipeline over 1,680 km connecting Afghanistan, Pakistan and India with Turkmenistan.

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

Pakistan and India will receive 1.325 bcfd of gas each while Afghanistan will get 500 mmcfd. Turkmenistan is expected to achieve financial close for the project by December 2016 for simultaneous completion of the gas field development and pipeline construction in three years.

Published in The Express Tribune, August 25^th, 2016.

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