Afghanistan gives up share of TAPI gas, wants transit fee only

India and Pakistan to split Afghanistan’s share; Kabul may reconsider later.

ISLAMABAD: Pakistan and India are expected to pay another $450 million in transit fee to Afghanistan in order to receive gas from Turkmenistan under the multibillion dollars Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project.

Sources have told The Express Tribune that Kabul has withdrawn from purchasing its share of gas under the TAPI project, and the surplus will now be shared by Pakistan and India. “Kabul is instead relying on revenue earned on the account of transit fee, which amounts to $450 million per annum,” sources said; adding that India and Pakistan will pay over $215 million each every year.

Under the original plans, Pakistan was to receive 1.365 billion cubic feet of gas per day (bcfd) from the TAPI pipeline; India 1.365 bcfd and Afghanistan 0.5 bcfd.

“Kabul has now conveyed that it does not require gas at present, and the participants of the TAPI gas pipeline project have reached an understanding that Pakistan and India will share the gas forsaken by Kabul,” sources said. However, Kabul may approach Turkmenistan in the future if it needs gas, they added.

Pakistan, Afghanistan and India have already agreed on a transit fee of 49.5 cents per million British Thermal units (mmbtu), to be paid to Kabul.

The TAPI gas pipeline project aims to export up to 33 billion cubic metres (bcm) of natural gas per year through a proposed 1,800 kilometre (km) pipeline from Turkmenistan, which will pass through war ravaged Afghanistan and into Pakistan and India. The estimated cost of the project is $7.6 billion, based on a prefeasibility study done by Penspen, and engineering and management consultant for the oil and gas industry.

Pakistan and India have already signed Gas Sales Purchase Agreements (GSPAs) and efforts are being made to attract potential investors for financing for the project.



Representatives from ADB, Turkmenistan, Afghanistan, Pakistan and India attended road shows organised from September 11 to 20, 2012 in Singapore, New York and London, to meet potential project sponsors interested in the TAPI pipeline. The Asian Development Bank (ADB), which is acting as the transaction adviser for the project, had organised these road-shows in major financial hubs to attract financers.

According to the Ministry of Petroleum, the Singapore road show was well received, and with renowned companies and financial institutions such as Petronas, Temasek and the State Bank of India participating. Investors were given a comprehensive presentation by the ADB and TAPI members on the overall structure of the project, the supply source, and the market demand in Afghanistan, Pakistan and India. Invitees were also updated on the current status and the ways forward.

The New York road shows were attended by leading international oil companies such as Chevron and ExxonMobil and leading financial institutions such as Citicroup and the Export-Import Bank of the US. All participants expressed a keen interest in the project. In the London Road Show, TAPI representatives met with officials from British Petroleum, Shell, British Gas and Morgan Stanley.

Published in The Express Tribune, November 29^th, 2012.