With fears of supply constraints lurking in the mind, Pakistan should consider seeking guarantees from Turkmenistan for ensuring promised gas flow under the TAPI pipeline project before Ashgabat makes any commitment to Europe for a trans-Caspian gas pipeline, officials say.
Growing Chinese interest in gas purchase from Turkmenistan and construction of the trans-Caspian pipeline may block gas flow to the Turkmenistan, Afghanistan, Pakistan and India (TAPI) pipeline because Ashgabat will not be able to meet demand of both sides, background discussions with officials reveal.
Experts increasingly voice fears that the European project will bury the TAPI scheme, considered a last hope for Pakistan to buy cheap gas and ease its energy crisis after the apparent shelving of the Iran-Pakistan (IP) pipeline in the face of US pressure.
Earlier this year, Turkmenistan once again got engaged in contact with the US and the European Union as well as multinational companies to push ahead with the trans-Caspian pipeline with an aim to export gas to the lucrative EU market through the Caspian Sea, Azerbaijan and Turkey.
Total volume of gas supplied to Europe is estimated at around 250 billion cubic metres and under the Caspian pipeline the region will get 15 billion cubic metres.
In the case of China, Turkmenistan began delivering gas in late 2009 and in November 2011, it agreed to provide an additional 25 billion cubic metres, bringing the total volume to 65 billion cubic metres per annum.
Gaffney, Cline & Associates and McKinney & Company have conducted independent studies on Turkmenistan’s gas deposits, which show that the reserves, especially the ones already explored, are not very huge.
Over the past few years, Pakistan has been facing its worst energy crisis that has stunted growth of commercial and industrial business as well as the overall economy. The country’s gas production is expected to drop from the present 4 billion cubic feet per day (bcfd) to 2.53 bcfd in 2019-20, threatening collapse of the economy if additional supplies are not arranged.
Talking to The Express Tribune, energy expert Dr AH Nayyar said Pakistan had consumed 40% of its tapped natural gas deposits and the remaining would hardly last 15 to 20 years. “We should secure gas supply from Iran and Turkmenistan to meet future needs,” he said.
The US seemed to be more interested in building the trans-Caspian pipeline in an attempt to take Turkmen gas to Europe from its traditional routes, officials pointed out and said Washington was least interested in gas delivery to Pakistan through TAPI and once again Islamabad may be a victim of the US policy.
Former petroleum secretary GA Sabri suggested that secured gas supplies from Turkmenistan would depend on an agreement between the two sides. “If Pakistan has a good agreement in place, it should not be concerned about anything,” he said.
According to officials, Washington is more interested in the award of contracts to US firms. Turkmenistan has no funds to develop gas fields and is banking on US companies.
Ashgabat has offered them offshore gas exploration contracts but the companies want a stake in onshore fields. Now in this area, the two sides are negotiating deals.
In TAPI pipeline, the progress has come to a halt as US energy giants Chevron and ExxonMobil could not finalise gas extraction contracts against financing for the project.
According to former petroleum secretary Dr Gulfraz, who had been part of negotiations on gas pipelines in 1997, consortium leader Unicol pulled out of the TAPI project following directives of the US State Department, leaving Pakistan in a lurch and depriving it of cheaper gas.
Now after the withdrawal of US forces from Afghanistan by the end of 2014, he believed, Washington would again be opposing the TAPI pipeline following a shift in its policies.
Published in The Express Tribune, June 25th, 2014.
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Author must understand the caspian pipeline project's prospects are already hurt by the fact that Statoil and Total which were the largest investors in the pipeline have sold a large portion of their holding interest in the pipeline as well as the shah deniz offshore azeri field.Turkmenistan was a part of this project but the companies pulling out of pipelines and also the major supply fields is because they expect gas prices to fall in the medium term in europe owing to massive LNG supplies from Canada and US as well as Russia and Australia.Add this with the other major issue of Europe's own demand falling because of slowing economic growth and the pipeline is not that lucrative in the medium term which is why companies are selling their stakes. If there is a competitor for TAPI it is chinese demand.China is always in favour of piped gas as opposed to LNG .Petrochina and sinopec have invested heavily in pipelines from Turkmenistan to china .Turkmenistan doesnt permit international explorers from drilling onshore but permits them in offshore drilling where it has limited expertise.Hence chinese companies are investing massively in offshore fields.Hence China and secondly turkey which is close to turkmenistan and has a huge appetite for Gas are the true competitors for TAPI Pakistan's best interest lies in IP gas pipeline and even more in developing its own shale resources estimated at close to 200 TCF.needless to say our conventional reserves of 84 TCF are half utlised already but imagine the potential of 200tcf.Moreover our offshore potential in Indus block a b c e are massive and unexplored
Portraying USA as bad guy here is inappropriate. America was never going to get a drop of Turkmenistan gas - regardless of it's route. American govt is interested in facilitating developmental contracts for American oil producers and jobs for American's - a responsible act done for American's - something a govt is suppose to do. Does the USA care whether the gas goes to Europe or Pakistan/India - normally not - but with the recent Ukraine problem that may have changed as more gas for Europe likely puts more pressure on Russia. Lastly - despite the contention of this author - there is no reason to believe that Turkmenistan gas can't go to both India/Pakistan as well as Europe.
@vector you forgot oman-iran-india deep sea under water gas pipeline. As well as yet to be tapped Arabian long Coast we have stretching from Gujarat to west to Bengal to east for oil and energy exploration under sea.
We are suffering at our own hand. We deserve it.. "Pakistan makes policies for Personal interest while the Rest of world makes policies for National Interest. Our Ego dominates our policies". we havnt learnt from our past. we make the same mistakes again & Again. I hope this current govt will complete its term. A lot of improvment & stablity is taking place across Balochistan, much of sind & K.P. hope its sustained for 5 years of this govt.