TAPI DEAL -- GOVT SET TO MAKE AVAILABLE SUSTAINABLE ENERGY TO ALL.
Pakistan is currently facing gas deficit of about 2 bcdf (billion cubic feet per day) as the country's overall gas production is between 3.8 bcdf-4.2 bcfd but the demand stands at 6 bcfd which rises to 8 bfcd during peak cold. The gas shortage crisis has hit hard Pakistan and major cities in Punjab, Khyber Pakhtunkhwa and Balochistan including Lahore, Peshawar, Quetta etc. In order to review energy policies and to take serious measures to address the gas shortage problems, the Government of Pakistan had planned to overcome the gas loadshedding through gas pipeline projects such as IP, TAPI, and importing liquid gas from Qatar. At international level, the US, Russia, China, UAE and Singapore have realized Pakistan's energy needs and have shown interest in exploring opportunities for gas import, terminals and pipelines.
Pakistan understands that total dependence on foreign hydrocarbons is not desirable, but also realizes that domestic renewable energy alone cannot meet demand. The ongoing power shortages have caused severe damage to the manufacturing industry in Pakistan, especially the textile sector. Facing gas shortages, the Nawaz led government, recently inaugurated TAPI gas pipeline project. The project would help ease energy crisis in the country. The TAPI pipeline, also nicknamed the peace pipeline, is expected to bring peace and stability in the region in the wake of regional cooperation. TAPI would play a vital role in meeting the country's energy needs. The pipeline will give Pakistani a chance to fulfill their campaign promises to provide sustainable energy to all.
The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project aims to bring natural gas from the Galkynysh and adjacent gas fields in Turkmenistan to Afghanistan, Pakistan and India. The Asian Development Bank (ADB) is acting as the facilitator and coordinator for the project.
Presently, the government is working on three gas import programs which will bring about 4 billion cubic feet of gas per day (bcfd). This includes 1.325 bcfd from TAPI, about 750 million cubic feet per day (mmcfd) from the Iran-Pakistan pipeline and about 2 bcfd from LNG imports.
Afghans want to transform their country into a major trade and energy corridor. Pakistan and India have great needs for more energy. Turkmenistan seeks to diversify its gas markets. The four nations that are part of the $10-billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project have signed an initial investment agreement. The signing will clear the way for updating the feasibility study and finalizing the pipeline route in Afghanistan. The agreement was inked by representatives of the four nations and the TAPI Pipeline Project Company in Istanbul last month. They had already registered the company in November 2014 in which Afghanistan, Pakistan and India would have 5 percent shareholding each and the remaining 85 percent stake would be held by Turkmenistan.
Afghanistan, Pakistan and India will be depending on each other. It will also connect South Asia and Central Asia. TAPI project was expected to be completed by the end of 2019. Turkmenistan will make an investment of around $25 billion to deliver around 3.2 bcfd of gas to three energy-hungry countries - Afghanistan, Pakistan and India - by December 2019 for 25 years. Of the total, $15 billion will be poured into developing the gas field whereas $10 billion will be spent on laying a 1,680km-long pipeline.
The TAPI gas will cost around $3.2 per million British thermal units, which will rise to $6.5 per unit after including the tolling tariff and transit fee to be paid to Afghanistan. Afghanistan is estimated to receive about $500-600 million in transit fee from Pakistan and India and will ensure security of the pipeline. India will also pay about $250 million in transit fee to Pakistan. Pakistan and India will each receive 1.325 bcfd of gas while Afghanistan's share has been set at 500 mmcfd, which will also be up for grabs either by Islamabad or Delhi if Kabul does not need it.
Turkmenistan, which sits on the world's fourth-largest gas reserves, started building its section of the 1,814-kilometre (1,127-mile) link, designed to ease its dependence on Russia and China, last December, but the three other countries have yet to begin work on their parts of the pipeline. They will be using these funds to carry out various studies, preliminary engineering, environmental design and various research of the route. Turkmen state energy firm Turkmengas is the main shareholder of TAPI Pipeline Company Ltd, the joint venture set up to carry out the project. Other investors are Afghan Gas Enterprise, Pakistan's Inter State Gas Systems Ltd and GAIL (India) Ltd.
The company would most likely be based in Dubai. Originating at the giant Galkynysh gas field, the TAPI pipeline will tranship 33 billion cubic metres (bcm) of gas a year. The TAPI project faces several risks, such as the deteriorating security situation in Afghanistan and lack of clarity about its financing.
Turkmenistan is in talks with the Islamic Development Bank, the Saudi Fund for Development and Japan's government on financing the construction of TAPI pipeline which is intended to supply gas to energy-starved Afghanistan, Pakistan and India. The $10 billion TAPI pipeline is supposed to carry gas from Turkmenistan's giant Galkynysh gas field - a project designed to ease the former Soviet state's dependence on Russia and China. The 1,814-km route also faces security challenges. Current plans send the underground pipeline through one of Afghanistan's most violence-wracked provinces, Helmand, where the Taliban insurgents hold sway.
The 1814 kilometers of pipelines include 214 kilometers running through Turkmenistan, 774 kilometers through Afghanistan and 826 kilometers through Pakistan. Both Pakistan and Turkmenistan had good coordination at international fora and would continue to work together for regional and international peace and security. Regional connectivity was an important pillar of Pakistan's Vision 2025, aimed at making the country a hub of regional trade and Commerce.
The gas line will bring warmth and cordiality, and generate economic activity, create job opportunities and improve the living standards.
|Printer friendly Cite/link Email Feedback|
|Publication:||Pakistan & Gulf Economist|
|Date:||Aug 14, 2016|
|Previous Article:||DISCOVERY OF INDIGENOUS OIL, GAS RESERVES IN BALOCHISTAN A GOOD TURN.|
|Next Article:||LNG IMPORTS HELP INCREASE RECORD ELECTRICITY GENERATION; COMMON MAN MISERY PERSISTS.|