Top US energy companies – Chevron and ExxonMobil – have dropped out of the race to become a consortium leader in financing the Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline following dismissal of their demand for an equity stake in the project.
The two companies were seeking shareholding in the field from where Turkmenistan would supply gas to energy-starved Pakistan, Afghanistan and India in response to their commitment to providing funds for laying the gas pipeline, officials say.
However, Turkmenistan turned down the request, forcing the companies out of the competition to become the team leader.
Turkmenistan desires to award offshore gas extraction contracts to Chevron and ExxonMobil, but for that it needs to change the rules.
According to the officials, seeing an empty field, now Total of France and Malaysia’s Petronas have entered the fray and are expressing interest in gas exploration in Turkmenistan without seeking any stake.
“The government of Turkmenistan is negotiating with Total and Petronas a services agreement which is expected to be finalised in two months. The two firms could work as the consortium leaders,” an official said.
“After receiving reports from Turkmenistan, Pakistan will again engage into talks with the central Asian state.”
The Afghan government says it does not require the entire committed volume of gas and only needs a part of it. The remaining quantity will be shared by Pakistan and India.
“For the pipeline, a route survey will be undertaken. Its engineering design is also yet to be prepared,” the official said.
Under the TAPI project, which is expected to cost over $10 billion, 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.
Earlier, energy giant Chevron had emerged as the potential leader in a consortium that will finance and run the transnational TAPI pipeline.
The four countries linked with the project are currently in the process of setting up a consortium and selecting a technically capable and financially sound company as the consortium leader, which will design, finance, construct, own and operate the gas pipeline.
Published in The Express Tribune, September 23rd, 2014.
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