Private sector of India keen to participate in the regional gas pipelines

Mar 08 - 14, 2004



One of the major concerns of India for joining the cross border natural gas pipeline from Turkmenistan or Iran was the security risk of the pipelines passing through Afghanistan in view of the disturbed political conditions in that country. Obviously, the strained political relations between Pakistan and India were another factor which so far kept India away from joining the cross border pipeline projects.

The concerns were well taken and the Asian Development Bank (ADB) in order to overcome any eventually which may disrupt the supply of gas through the pipeline project, has offered to provide technical assistance in creating gas storage facilities to ensure uninterrupted gas supplies in case of any possible eventualities.

The Asian Development Bank (ADB) has approved a $700,000 technical assistance grant for a study to locate area for construction of natural gas reservoirs in Pakistan. The study is to be conducted as a precautionary measure to ensure uninterrupted gas supply in the vent of possible disruption in gas supply from the proposed Turkmenistan-Afghan-Pakistan (TAP). The TAP natural gas pipeline project is a 1700km pipeline that will transport up to 30 billion cubic meters of natural gas annually from Daulatabad gas fields in south East Turkmenistan to consumers in Afghanistan, Pakistan and possibly to India. During recent visits by trade delegations from Pakistan, the gas pipeline projects were discussed between the private sector representatives of the two countries and the people coming back from India have indicated that the industrial trade and business community is supporting the project with the hope that much needed cheaper natural gas would greatly help redressing the acute energy shortage specially in northern parts of Pakistan. Traders are of the view that the Indian leadership is also re-looking at the project and there are strong indications that not only India but investors from rest of the world are also coming in to participate in these multi-million cross border pipeline projects.

The Federal Minister for Petroleum and Natural Resources, Nauraiz Shakoor has also invited foreign investors to take benefit of the incentives offered by the government in on-shore and off-shore oil and gas exploration activities in Pakistan. The minister was speaking at the first ever Caspian and Black Sea Oil and Gas conference-2004 held in Turkey last week. Highlighting the vibrant energy sector in Pakistan, the minister said that oil and gas sector is being developed on sound footings in Pakistan which is not only attracting foreign investment but also has put the country on the path of self-reliance in the energy sector.

At present 25 companies, out of which 22 are foreign, busy in oil and gas exploration and production in Pakistan.

There are vast opportunities for the investors in oil and gas sector, particularly in upgradation of refineries, setting up of coastal refinery, regional gas pipelines from Turkmenistan and Iran to Pakistan. The $3.3 billion project, take five years. It will begin after the countries involved and other partners would finalize various project agreements.



Underground reservoirs are proposed for Pakistan to store sufficient quantity of gas in case of any disruption owing to any political or other kind of disturbance in transportation of the gas through the pipeline. The gas demand in Pakistan is gradually increasing with the switching over of various gas consuming sector from oil to gas fired system, especially in power generation and transportation sectors.

The technical assistance from ADB will identify possible reservoirs based on size, containment capacity, productivity and location.

The short-listed reservoirs will undergo a more detailed evaluation. Other facilities needed to integrate the reservoirs with the gas infrastructure will also be evaluated. Cost estimates and implementation schedules to develop and integrate the selected reservoirs will be prepared.

The technical assistance will also provide legal advisory services to help the governments in finalizing various project agreements and disseminate information about the project among major oil and gas transportation companies to facilitate bid solicitation.

The ADB has previously financed a techno-economic feasibility study for the pipeline project, a market study on demand for natural gas in Pakistan and northern India, and a risk analysis and risk mitigation study on concerns of consumers in gas supply is disrupted. The technical assistance is due for completion in October this year.

The Government of Pakistan will contribute $125,000 equivalent towards its total cost of $825,000.nd cotton yarn prices.