Pakistan, Turkmenistan to give big push to TAPI project

MoU signed for service contract for gas exploration in Central Asia

ISLAMABAD:

Pakistan and Turkmenistan are set to engage in talks in a bid to take a giant leap forward in executing the US-backed transnational pipeline project that will connect four countries in Central and South Asia.

Under the project called Turkmenistan, Afghanistan, Pakistan and India (Tapi) gas pipeline, Ashgabat and French energy major Total have signed a memorandum of understanding for a service contract for gas extraction in the Central Asian state, say officials aware of the development.

Talks with Chinese and Russian companies are also under way in order to select a consortium leader, which will finance and implement the $10-billion pipeline project. A Pakistani team will leave for Turkmenistan on Thursday.

Read: Work on TAPI to start by December

“During the dialogue in Turkmenistan, progress on the service contract being negotiated between the Turkmen government and multinational companies will be reviewed and the way forward will be discussed to build the pipeline,” a senior government official told The Express Tribune.

Earlier, US energy giants Chevron and ExxonMobil had expressed interest in gas exploration contracts and laying the pipeline, but they wanted a share in gas production which Turkmenistan did not endorse.

Now, Chinese, French and Russian firms are working on the service contract with Ashgabat and if an agreement is reached, they will charge a fee against the contract.

Gas companies of Turkmenistan, Afghanistan, Pakistan and India have already established a company that will build, own and operate the natural gas pipeline, which will be 1,800km long, starting from Turkmenistan and reaching India after passing through Afghanistan and Pakistan.

The four state-run gas companies will have an equal share in the pipeline operator. According to officials, the shareholding agreement was reached before selecting the consortium leader.

In a recent visit to Pakistan, the vice premier and oil minister of Turkmenistan invited Prime Minister Nawaz Sharif to attend the groundbreaking ceremony of the pipeline project in December this year.

Leading a delegation, the vice premier met Petroleum and Natural Resources Minister Shahid Khaqan Abbasi along with other officials and discussed the way forward for an early start of work on the pipeline.

Under the project, Pakistan will receive 1.365 billion cubic feet of gas per day (bcfd) from Turkmenistan, India will also get the same 1.365 bcfd and Afghanistan will receive a smaller share of 0.5 bcfd.

Pakistan and India have already signed a gas sale and purchase agreement and efforts are under way to attract potential investors to finance the laying of the pipeline.

Read: Pakistan looks for conflict resolution mechanism

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 and construct the gas pipeline.

Published in The Express Tribune, August 6^th, 2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.