Research Analyst
Jan 10 - 16, 2011

The Trans-Afghanistan Pipeline (TAP) is a proposed natural gas pipeline being developed by the Asian Development Bank. The cost of the pipeline is estimated at US$7.6 billion. The pipeline will transport Caspian Sea natural gas from Turkmenistan through Afghanistan into Pakistan and then to India, that's why it is commonly known as TAPI (Turkmenistan-Afghanistan-Pakistan-India). The Afghan government is expected to receive eight per cent of the project's revenue.

The original project started in March 1995 when an inaugural memorandum of understanding between the governments of Turkmenistan and Pakistan for a pipeline project was signed. In Aug 1996, the Central Asia Gas Pipeline Ltd. (CentGas) consortium for construction of a pipeline, led by U.S. oil company Unocal, was formed. On 27th Oct 1997, CentGas was incorporated in formal signing ceremonies in Ashgabat, Turkmenistan by several international oil companies along with the government of Turkmenistan. In Jan 1998, CentGas over Argentinean competitor Bridas Corporation signed an agreement that allowed the proposed project to proceed. In June 1998, Russian Gazprom relinquished its 10 per cent stake in the project. Unocal withdrew from the consortium on 8th Dec, 1998. The new deal on the pipeline was signed on 27th Dec 2002 by the leaders of Turkmenistan, Afghanistan and Pakistan. In 2005, the Asian Development Bank submitted the final version of a feasibility study designed by British company Penspen.

The project has revived and drawn strong US support as it would allow the central Asian republics to export energy to western markets without relying on Russian routes. The U.S. is seriously looking at the project, and it is quite possible that American companies will join it. Due to increasing instability, the project has essentially stalled; construction of the Turkmen part was supposed to start in 2006. On 24th April 2008, Pakistan, India and Afghanistan signed a framework agreement to buy natural gas from Turkmenistan. The intergovernmental agreement on the pipeline was signed in Dec 2010 in Ashgabat.

The 1,680 km pipeline will run from the Dauletabad gas field to Afghanistan. From there TAP will be constructed alongside the highway running from Herat to Kandahar, 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. The pipeline will be 1,420 millimeters with a working pressure of 100 standard atmospheres. The initial capacity will be 27 billion cubic meters (bcm) of natural gas per year of which 2 bcm will be provided to Afghanistan and 12.5 bcm to each Pakistan and India. Later the capacity will increase to 33 bcm. Six compressor stations would be constructed along the pipeline. The pipeline was expected to be operational by 2014.

On the other hand, worldwide natural gas consumption has increased 44 per cent during 2010 from 108 trillion cubic feet in 2007 and will be projected to go 156 trillion cubic feet in 2035. Demand for natural gas slowed in 2008 as the global economic recession began to affect world energy markets, and in 2009 world consumption of natural gas contracted by an estimated 1.1 per cent. The impact of the recession on natural gas use was especially evident in the industrial sector-the domestic sector with the highest level of natural gas consumption-where demand for natural gas declined by an estimated six per cent from 2008 to 2009.


2007 108
2015 125
2020 136
2025 145
2030 150
2035 156

Natural gas consumption will grow an average 1.8 per cent per year till 2020. From 2020 to 2035, the growth in consumption of natural gas would slow to an average 0.9 per cent per year, as prices rise and increasingly expensive natural gas resources are brought to the market.

The industrial sector accounted for approximately 40 per cent of total world natural gas use in 2007, and it maintains that share through 2035.

Furthermore, electricity generation becomes an increasingly important part of the world's natural gas consumption, accounting for 36 per cent of the world total in 2035, up from 33 per cent in 2007. Natural gas consumption in non-OECD countries grows approximately three times as fast as consumption in OECD countries, with increases averaging 1.9 per cent per year for non-OECD countries and 0.6 per cent per year for OECD countries from 2007 to 2035.

Over the projection period, Iran and Qatar will alone increase their natural gas production by a combined 12 trillion cubic feet, nearly one-fourth of the total increment in world gas production.

In the U.S., one of the keys to increasing natural gas production has been advances in horizontal drilling and hydraulic fracturing technologies, which have made it possible to develop the country's vast shale gas resources, and have helped to increase total U.S. natural gas resources by almost 50 per cent over the past decade.

LNG accounts for a growing share of world natural gas trade. World natural gas liquefaction capacity increases 2.4- fold, from about 8 trillion cubic feet in 2007 to 19 trillion cubic feet in 2035. Most of the increase in liquefaction capacity is in the Middle East and Australia, where a multitude of new liquefaction projects are expected to be developed, many of which will become operational within the next decade.

Despite the growing importance of LNG, long-distance pipelines remain an important component of world gas trade. As indigenous natural gas production in OECD Europe declines, its import demand increases, driving much of the global growth in pipeline traded gas. The other major factor in the growth of piped gas is rising natural gas demand in Asia, particularly China.


Pakistan's need for energy is at desperate level. The country is facing severe energy crisis from last two years, which continues to grow. A land base gas pipeline to fulfill energy needs is many times cheaper than other available sources to import energy in Pakistan.