Gas import: China abandons IP project, eyes TAPI pipeline

Beijing plans to build gas pipeline from Gwadar to its territory.

ISLAMABAD:

In a strategic move, China has shelved a plan to be part of the Iran-Pakistan (IP) gas pipeline that faces the threat of US sanctions and has come up with an offer to join the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline to meet its growing energy needs.

According to sources, Beijing plans to lay a pipeline under the TAPI project from Gwadar to China, which will turn Gwadar Port into an energy corridor.

Bangladesh has already approached Turkmenistan, which will export gas from its vast reserves, and other countries that are part of the project, seeking to be part of the TAPI pipeline to meet its energy needs.

“Once Turkmenistan and US gas companies finalise a deal for exploration rights, China and Bangladesh will formally engage in talks to participate in the venture,” an official said.

Already, China has taken over operational control of Gwadar Port where it will establish an industrial city.



Earlier, the official added, China had expressed interest in becoming a member of the IP project, but changed its stance later as the future of the venture looked uncertain in the face of influence from a Gulf Arab country and threat of US sanctions.

Pakistan and the three other participating countries are finalising tender documents for the TAPI pipeline in consultation with the Asian Development Bank that is playing the role of transaction adviser.

However, officials said progress had been very slow because of some unresolved issues between Turkmenistan and US companies including Chevron and ExxonMobil. Only that company will get the contract for laying the gas pipeline that has gas extraction contracts in Turkmenistan.

Turkmenistan does not offer exploration rights to foreign companies for its onshore fields. However, it has offered offshore exploration rights to Chevron and ExxonMobil, which could enter into swap arrangements for onshore fields.

“This process is yet to be finalised. It could be expedited when the petroleum minister of Pakistan and delegations of Afghanistan and India visit Turkmenistan in the second week of May to attend an energy conference where they will hold meetings on the sidelines,” the official said.

The two US firms have been shortlisted, which will be given tender documents for vying for the pipeline contract.

According to officials, the four countries linked with the TAPI 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.

Chevron, a renowned oil and gas company with vast experience in the energy sector including gas pipelines, is one of the potential consortium leaders. Indian and Afghan officials had already met a representative of Chevron in Delhi to discuss the company’s potential role in the project as a consortium leader.

Chevron had also approached Pakistan, insisting it was keen to undertake work on the pipeline and there was a strong possibility that the company would be selected as the consortium leader to finance, design and build the pipeline.

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.

Pakistan and India have already signed gas sale and purchase agreements and efforts are under way to attract potential investors for financing the project.

Published in The Express Tribune, April 30^th, 2014.

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