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TAPI gas pipeline: a dream project for Pakistan, India

For many Pakistanis, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is mere a dream. However this project is vital for Pakistan and India; as both are facing acute energy shortage crises.

Its starting point is in Turkmenistan, passes Afghanistan and then reaches to Pakistan and India. It is also known as Trans-Afghanistan Pipeline, is a natural gas pipeline being developed by the Galkynysh – TAPI Pipeline Company Limited with participation of the Asian Development Bank. The pipeline will transport natural gas from the Galkynysh Gas field in Turkmenistan through Afghanistan into Pakistan and then to India. The original project started on March 15, 1995 when an inaugural memorandum of understanding between the governments of Turkmenistan and Pakistan for a pipeline project was signed. This project was promoted by Argentinean company Bridas Corporation.

The proposed 1,814-kilometre (1,127m) pipeline will carry 33 billion cubic meters (bcm) of gas a year from Galkynysh gas field. In Afghanistan, TAPI pipeline will be constructed alongside the Kandahar–Herat Highway in western Afghanistan, and then via Quetta and Multan in Pakistan. The final destination of the pipeline will be the Indian town of Fazilka, near the border between Pakistan and India. Construction on the project started in Turkmenistan on December 13, 2015. Construction on the Afghan side started on February 24, 2018, while construction on the Pakistan side is planned to start next year. Originally, the cost of the pipeline project was reportedly estimated at US$7.6 billion, but a more recent estimate was $10 billion.

The pipeline will be 1,420 millimetres (56 inch) in diameter with a working pressure of 100 standard atmospheres (10,000 kPa). The capacity will be 33 billion cubic metres (1.2 trillion cubic feet) of natural gas per year of which 5 billion cubic metres (180 billion cubic feet) will be provided to Afghanistan and 14 billion cubic metres (490 billion cubic feet) to each Pakistan and India. Six compressor stations would be constructed along the pipeline. The pipeline is expected to be operational by 2020.

Pakistan and India will each get 42 percent of that volume — the rest will be purchased by Afghanistan. The US strongly supports the pipeline plan, calling it “a transformative project for the entire region”. If implemented, it will help to attract much-needed investment to Afghanistan, increasing budget revenues through transit fees and contribute to the country’s overall development.

By 2020-21, demand for gas in India is expected to double and the demand for gas in Pakistan over roughly the same timeframe will be three times higher than supply. Turkmenistan is keen to implement this project in order to diversify its export routes and decrease its dependency on China. The Asian Development Bank has sponsored the feasibility study, the route has been mapped and the source field has been determined.

TurkmenGaz, Afghan Gas Enterprise, Inter State Gas Systems (Pakistan) and GAIL (India) are all equal shareholders in the TAPI Pipeline Company which will build, own and operate the pipeline. All countries involved in the project have signed a gas sale and purchase agreement. Surprisingly, it is not clear who will finance the project that is estimated to cost $10 billion. The Pakistani and Indian governments show no indication that they can pay for the pipeline.

 

None of the four energy companies that formed the consortium has enough resources to fund the construction. They have debated from the very beginning about inviting a global energy giant to finance the project in the form of a private company with sufficient funds and expertise. Chevron, Exxon Mobil, Total and a few others have been mentioned as possible companies who could get involved. However, all these companies have demanded a share in developing the gas field if they are to take the risk of financing it.

Construction of the pipeline is a costly and risky venture, and companies want to make sure that they will make enough money in order to return their investments and make a profit. One cannot make money from operating a pipeline. This could only be possible by developing a gas field and exporting the gas. However, Turkmenistan refuses to let any foreign company have a stake in its gas fields. As these are their national resources and so wants to retain its control. On the other hand China has direct access to Turkmenistan’s onshore gas fields in return of billions of dollars investment into Turkmenistan and also fully financed the construction of the Turkmenistan-China gas pipeline.

The security issues may not be the only obstacles to shipping gas through TAPI. It seems there is no coherent mechanism in place to prevent participating states from using the pipeline as political leverage against neighbours, particularly if there is a dispute between Pakistan and India. Turkmenistan’s approach is to sell its gas at its border and argue that it is not responsible for whatever happens afterwards. So it is not clear who will ensure that Pakistan will not cut off the gas flow into India if there is a new wave of tension between the two countries.

The Asian Development Bank somehow believes that all parties will be actively working to ensure that gas flows cannot be manipulated for political advantage and they will have necessary mechanisms to avoid adequately to avoid such situation.

More than 700km of the pipeline will cross through Afghanistan, including Helmand and Kandahar provinces that are traditionally considered to be Taliban strongholds. This creates major security challenges for this project. The Afghan government has promised to provide troops to protect the pipeline. As Taliban gaining strength in the north makes the project even less attractive for investors.

The combination of security issues and financial complication are creating hurdles If Turkmenistan refuses to let foreign companies have direct access to its gas fields, those other projects are – like the TAPI project — in danger of remaining pipe dreams.

The author, Khurram Adeel Shaikh, is a PhD Scholar and a freelance writer. Currently he is associated with Bahria University, Karachi Campus, as Assistant Professor and could be reached at khurramadeel.bukc@bahria.edu.pk

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