Energy dialogue: US pushes Chevron’s bid for TAPI pipeline project

Pakistan, US officials to meet today at the US-Pakistan Energy Working Group meeting.

ISLAMABAD:

The United States may press Pakistan to award the multi-billion-dollar contract for the Turkmenistan-Afghanistan-Pakistan and India (TAPI) gas pipeline project to its energy giant Chevron, in a bid to shelve the Iran-Pakistan (IP) gas pipeline project.

They will meet during the fifth US-Pakistan Energy Working Group, part of the Strategic Dialogue framework, which is set to meet in Washington on Tuesday (today).

The US has been backing the TAPI gas pipeline project as an alternative to the IP gas pipeline project, and has repeatedly pressed Pakistan to shelve the latter. Chevron has offered to finance the gas import project, and in return wants the contracts for building the pipeline and developing gas fields in Turkmenistan.



The meeting of the energy working group will be co-hosted by Ambassador Carlos Pascual, US Special Envoy and Coordinator for International Energy Affairs, and Pakistani Minister of Petroleum and Natural Resources Shahid Khaqan Abbasi, and Minister for Water and Power Khawaja Asif. This working group fosters cooperation on Pakistan’s energy sector, including power generation, renewable energy, gas, and reform priorities.

Sources told The Express Tribune that the US wanted participating countries of the TAPI gas project to award the contract for building the pipeline to US energy giant Chevron.

“During the energy group meeting, the issue relating to awarding TAPI gas pipeline contract to Chevron will come under discussion,” sources said, adding that representatives of the US State Department and Chevron had also visited India for the same purpose.

Chevron and Exxon Mobil, renowned oil and gas companies with vast experience in the energy sector, have expressed interest to be the consortium leaders for the project, sources say. All participating countries have signed Gas Sales Purchase Agreement (GSPA) with Turkmenistan to import gas under TAPI gas pipeline project.

Pakistan is keen to see Chevron undertake work on the pipeline and sources stress there is a strong possibility that the US energy giant will be selected as consortium leader to finance, design and build the pipeline.

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 ones and export it to Afghanistan, Pakistan and India under the TAPI project. Turkmenistan does not allow foreign companies to search for hydrocarbons on onshore fields.

The Asian Development Bank (ADB), hired as an advisor to help generate funds for the project, has already warned that the TAPI gas pipeline project cost may exceed $10 billion against earlier estimates of $7.5 billion due to delays in implementation of the project.

The pipeline will pass through war-torn Afghanistan, which has assured Pakistan and other participating countries of providing adequate security for the pipeline.

Under the TAPI project, Pakistan and India will get 1.365 billion cubic feet of gas per day (bcfd) each from Turkmenistan, and Afghanistan will get 0.5 bcfd.

Turkmenistan will export natural gas through the 1,800 kilometer pipeline that will reach India after passing through Afghanistan and Pakistan.

Published in The Express Tribune, November 12^th, 2013.

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