In a major development, the four countries that are part of the Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline project have selected two US-based energy giants for financing and operating the multi-billion-dollar pipeline.
They have also finalised an agreement with the Asian Development Bank (ADB) which will act as transaction adviser to help generate over $7.5 billion of financing, sources say.
US-based Chevron and ExxonMobil have expressed interest in financing and running the pipeline project and a consortium of financiers will be set up that will be led by one of the two companies.
According to sources, the Ministry of Petroleum and Natural Resources will now seek approval from the Economic Coordination Committee (ECC) in its upcoming meeting to pave the way for formally signing an agreement with the ADB and selecting a consortium leader to arrange financing for the pipeline.
A spokesman for the petroleum ministry told The Express Tribune that a summary had been sent to the ECC for hiring the ADB as a transaction adviser and all countries had finalised an agreement with the bank.
Each of the four countries would pay a fee of $5 million to the ADB for its role as transaction adviser.
The ADB has already cautioned that project cost may exceed $10 billion against earlier estimate of $7.5 billion because of long delay in starting work on the pipeline, which will start from Turkmenistan and reach India after passing through Afghanistan and Pakistan.
War-wracked Afghanistan has already assured Pakistan and other participating countries that tribal lords will ensure the security of the pipeline.
The four countries linked with the project are in the process of setting up a consortium and selecting a technically capable and financially sound company as consortium leader, which will design, finance, construct, own and operate the gas pipeline.
Both Chevron and ExxonMobil, renowned oil and gas companies with vast experience in the energy sector, are keen to work as the consortium leader.
According to sources, Pakistan is keen to see Chevron undertake work on the pipeline and there is a strong possibility that the company will be selected as consortium leader.
On its part, Chevron has sought exploration rights in Turkmenistan as well as contracts in response to financing and running the project. However, Turkmenistan has offered exploration rights for offshore fields and asked Chevron to swap gas found in these fields for onshore gas and export it to Afghanistan, Pakistan and India under the TAPI project.
The offer comes as Turkmenistan does not allow foreign companies to search for hydrocarbons on onshore fields.
Pakistan, India and Afghanistan have already signed a gas sales and purchase agreement with Turkmenistan for import of gas under the project.
Efforts to construct the TAPI pipeline have been stepped up as the US is pushing Pakistan to press on with the project and shelve the Iran-Pakistan pipeline due to a standoff with Tehran over its nuclear programme.
However, the new government of Pakistan Muslim League-Nawaz (PML-N) has fended off the pressure and assured Iran that work on the IP pipeline will go on according to schedule.
Under the TAPI project, Pakistan will get 1.365 billion cubic feet of gas per day (bcfd) from Turkmenistan, India will also receive the same 1.365 bcfd and Afghanistan will get 0.5 bcfd.
Turkmenistan will export natural gas through a 1,800km pipeline that will reach India after passing through Afghanistan and Pakistan.
Published in The Express Tribune, November 2nd, 2013.