TAPI pipeline: Pakistan to press for reducing gas import price

Wants to link gas price with Brent crude oil rates

ISLAMABAD: Pakistan has decided to ask Turkmenistan to slash gas price by linking it with Brent crude oil rates under a revised pricing formula for the transnational gas pipeline that the Central Asian country is building to meet energy needs of Afghanistan, Pakistan and India.

“The government has decided to re-negotiate the price under the gas sale-purchase agreement with Turkmen Gas Company in the light of prevalent rates of liquefied natural gas (LNG) and comparable fuels,” said a senior government official while talking to The Express Tribune.



“The matter will be taken up in a meeting of the steering committee for the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project which will be held next month in India.”



Earlier, the gas price was linked with the Japan crude cocktail at 64% of its value. The same formula was applied to the Iran-Pakistan (IP) gas pipeline project.

However, Pakistan has secured a 15-year LNG deal with Qatar at 13.37% of the Brent crude price.

Later, the government entered into LNG contracts at further lower price at 11.99% of crude oil rate with Italian energy giant Eni under a long-term arrangement.

“Now, we will try to match this price,” the official said while pointing out that there was a clause in the gas pipeline agreements that if Pakistan succeeded in importing gas at cheaper rates, then Turkmenistan and Iran would have to match those prices.

Pakistan has already asked Iran to bring down the gas price for the IP pipeline. However, this project has been stalled in the wake of US sanctions on Tehran.

For the Tapi project, the laying of pipeline and development of gas field have started in Turkmenistan. Simultaneously, efforts to achieve financial close are under way and the project is expected to come on stream as per schedule.

The four countries participating in the Tapi project have already signed an investment agreement for the $10-billion transnational pipeline in a bid to kick off work, update feasibility study and finalise pipeline route in Afghanistan.



Leaders of the four countries performed the ground-breaking of the project in December 2015, 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 satisfying energy demand. 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.



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.

The official said a consortium of Japanese companies was working on fast track to develop the gas field in Turkmenistan whereas a Chinese company was working on building the pipeline.

Published in The Express Tribune, November 16^th, 2017.

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