The four countries that are part of a transnational gas pipeline starting from Central Asia are set to meet in Islamabad next week to finalise the award of a multi-billion-dollar project financing contract to French energy giant Total.
“Ministers of Turkmenistan, Afghanistan, Pakistan and India will meet on February 11 in Islamabad and attend a meeting of the steering committee on the gas pipeline project,” an official told The Express Tribune.
Top US energy companies – Chevron and ExxonMobil – have already dropped out of the race to become a consortium leader for financing the Turkmenistan, Afghanistan, Pakistan and India (Tapi) gas pipeline following dismissal of their demand for an equity stake in the project.
According to officials, gas-rich Turkmenistan has agreed, in principle, to sign a service contract with Total, allowing the company to act as the consortium leader for financing the pipeline.
Under a proposed deal, Total will help extract gas from Turkmenistan’s fields, which will be exported to Afghanistan, Pakistan and India. In return, the company will be paid a service fee in cash or in kind.
The officials suggest Pakistani companies – Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) – are likely to be part of the consortium and take part in gas extraction in Turkmenistan.
Gas companies of the four countries have already established a company to build, own and operate the 1,800km Tapi natural gas pipeline. The four state-owned companies will hold an equal share in the pipeline operator.
In efforts to find a consortium leader to finance the project, Total has emerged as a potential front-runner. In the meeting next week, ministers of the four nations will try to reach a final deal.
Noticing an empty field, according to the officials, Total had entered the fray and negotiated a deal with Turkmenistan for gas exploration without seeking any stake.
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. “This issue will also come up for discussion in the meeting,” the official said.
“A pipeline route survey will be undertaken. Its engineering design has also not been made so far,” he said.
Under the Tapi pipeline, which is expected to cost over $10 billion, Pakistan will get 1.365 billion cubic feet of gas per day (bcfd), India will also receive the same 1.365 bcfd and Afghanistan’s share is 0.5 bcfd.
Pakistan and India have already signed gas sale and purchase agreements and efforts are under way to attract potential investors for financing the project.
The four countries are 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 and construct the pipeline.
Published in The Express Tribune, February 3rd, 2015.