TAPI: Prospect of Implementation Fatima Habib It is estimated that in ideal circumstances, the TAPI gas pipeline project should get progressing somewhere in 2015, bringing an estimated 3.2bn cubic feet of natural gas per day (bcfd), around 90m cubic meters a day (mmcmd), from Turkmenistan. Pakistan and India would get 38mmcmd each, while the remaining 14mcmd will be supplied to Afghanistan. Taking an overview of the situation, it is still very immature to say how practical this project is in term of its completion. According to the ADB, it has finally overcome the majority of the sticking points that stood in the way of implementation. The focus should be on progress towards construction, not expansion of the project. That is, the agreements must be signed among the resource owners who should ensure stability of supplies and security. The Turkmenistan president said recently that 21st meeting of the TAPI working group was held in Bangkok (17-19 March, 2013) and the parties agreed to establish a special purpose vehicle (SPV). “Struggling to get the $9bn TAPI gas pipeline underway, its four promoter nations have decided to float a special purpose vehicle to keep the transnational project alive. The SPV, TAPI Ltd will be formed with Turkmenistan, Afghanistan, Pakistan and India pumping $5m equity each”. The next step would be the selection of the consortium leader and that would mark the beginning of the practical implementation of TAPI project. Still there is an ambiguity about the progress. Disagreement with Turkmenistan over the transit fee for the gas is among the reasons for the delay. There are not very bright chances of practical implementation of TAPI yet. As Pakistan has signed Iran-Pakistan (IP) pipeline deal and this will help Pakistan fulfil its most of energy requirement. Elections have been held and on both sides there are new governments, still there are uncertainties what the new dispensations will decide. India already had proposed another route. Afghanistan and Turkmenistan are still trying to overcome transit fee issues, and security problems in Afghanistan are also a hurdle. The start of work on the Iran-Pakistan (IP) pipeline may jeopardize the prospects for TAPI. Security in Afghanistan is a kind of hurdle in the construction and operation of project although Afghanistan president Hamid Karzai asserts that Afghanistan has all the requisite mechanisms for providing security and technical completion of the project. Securing the pipeline carrying natural gas from terrorist attacks would be its biggest challenge. The current situation of instability has limited the ground for investment. More likely end of the war would signal the start of the project. The project could be interminably delayed if Afghanistan and Turkmenistan cannot agree on a transit price. Turkmenistan has settled the price issue with both Pakistan and India. The price specified by Turkmenistan is higher than the standard international price. That why Afghanistan is not accepting the price. Regional rivalries could also torpedo the project. While the four countries involved stand to gain, disagreements between them has also led to delays in the project, which was first conceived in the 1990s. The size and focus of the project is another challenge. Feasibility studies have been conducted most notably by the ADB. But if the consortium does not concentrate on quickly constructing a pipeline on a manageable scale, it risks repeating the mistakes of the now infamous Nabucco pipeline, which was to have connected Turkmenistan on its Caspian side with natural gas consumers in the Central Europe. After close to a decade and a half of discussion, Nabucco is now being scaled back to half its size, and may not go forward at all. Current plans for TAPI call for a 1700km line bringing up to 33bn cubic meters of gas per year to consumers along the route. This is already very ambitious for a route traversing dangerous territory, and following the agreement inked some months back, Bangladesh expressed interest in joining the project, potentially extending it to 2,500 km, with an increased capacity. Projected costs, calculated by the ADB, have also grown from $7.5bn to $12bn, even without the proposed Bangladesh extension. A growing power crisis, the steady drop in Krishna Godavari basin (KG-D6) natural gas production, and increased global petroleum prices have prompted the Indian policy makers to revisit all possible alternatives for increasing its supply of natural gas. Pursuit of these alternatives included signing the TAPI pipeline deal. The TAPI gas pipeline has got stuck as international pipeline company is willing to implement it unless Turkmenistan gives a share in the gas fields. On 20th March, 2013 President Zardari said that Pakistan attached great importance to the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline and wanted to see the project built as soon as possible. He also said that his government fully supported Turkmenistan’s initiative to establish trans-regional energy corridors. In his message to his Turkmen counterpart Gurbanguly Berdimuhammadov he said that the construction of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) was "essential" and a start of a new era of cooperation at the regional and interregional levels. (June 11, 2012) Recently New Delhi has proposed making changes to the construction of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. Accordingly, its length will increase and construction will start from Kazakhstan. According to The Hindu, the gas pipeline will head from the former Silk Road caravanserai city of Shymkent, known today for oil refining and enter Uzbekistan. India unveiled the concept of the pipeline which in future could be extended to Russia, during a meeting between External Affairs Minister Salman Khurshid and his Kazakh counterpart Erlan Idrissov. Bangladesh is also showing its willingness to join TAPI.
Posted on: Tue, 23 Jul 2013 19:09:01 +0000
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