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TAPI Moves Ahead.

Byline: Dr Ahmad Rashid Malik

New momentum has reached in energy supply. Turkmenistan would become the largest supplier of gas to south Asian countries, meeting their energy needs. The long-delayed energy project gains s sharp turn when the groundbreaking ceremony took place in Ashgabat on 13 December.

Pakistan, India, and Afghanistan are energy strapped. They can fulfill their gas needs from adjoining Turkmenistan, which is rich in gas. Its proven gas reserves are just after Russia, Iran, and Qatar. Turkmenistan is fast becoming world's energy grid and heading toward capturing word's gas markets. China is the largest buyer of Turkmenistan's gas, which accounts for over 75 per cent of its gas sales. Turkmenistan also supplies gas to Iran and Russia and wants to further increase the supply of gas. Turkmenistan plans to bring the gas production to 230 billion cubic meters by 2030 and to export 180 billion cubic meters of this volume.

The economic fate of south Asian countries is only change after they are connected with the supply of Turkmenistan's gas reserves. Turkmenistan began exports of gas to China in 2009 and aims to export up to 65 bcm there annually by 2020, but by 2018 may face competition from a rival pipeline scheduled to carry 38 bcm annually from Russia to China.

Turkmenistan has the world's sixth largest reserves of natural gas. The East-West gas pipeline is planned to be commissioned in December. The pipeline can become a part of the pipeline system for the Turkmen gas supply to Europe in the future, as mentioned by Elena Kosolapova in Trend on 18 November.

The Turkmenistan gas pipeline project was conceived in the 1960s under the former Soviet Union. After Turkmenistan's independence in 1991, the project gained more currency to provide gas through the pipeline from the Yoloten, Osman, and adjacent gas fields in Turkmenistan to Afghanistan (Herat-Kandahar)-Pakistan (Chamman Zhob-DG Khan-Multan) (TAP). Later, India has shown interest to join the project (TAPI), which will end its journey at Fazilka in India.

India back out from the Iran-Pakistan gas pipeline project in 2010 ostensibly under US pressure. After Iran's nuclear deal, Pakistan has shown more interest in the completion of the IP funded worth US$ 2.5 billion by China. Pakistan also has an LNG agreement reached with Qatar recently. These deals put additional pressure on the TAPI project. Nevertheless, the huge and sustainable size of the Turkmenistan's gas could well compete with other suppliers.

Under the TAPI, Afghanistan is expected to get 500 MMcfd, while Pakistan and India are expected to get 1,325 MMcfd each. The pipeline is 56 diameter, going through Afghanistan, and 800 km through Pakistan up to Fazilka, making the total length up to 1,535 km. Some 200 km of this pipeline will run through Turkmenistan.

During trilateral meeting between Pakistan-India-Afghanistan, the parties agreed to a transit fee figure with consensus. India will pay US$200-250 million in transit fees to Pakistan, while Pakistan will pay the same amount in transit fees to Afghanistan. For Afghanistan, this is the first multibillion project that would enormously feed its economy on regular basis. The project would address Afghan's underdevelopment and poverty.

The strategic environment is still hostile to the TAPI dream. Peace is yet not restored in Afghanistan. The Taliban still pose a threat to the Usbacked regime in Kabul. The Afghan Government is not in a position to provide security to the TAPI. Internal law and order and security situation in Pakistan is much improved after the military operation Zarb-e-Azb launched in 2014. In Balochistan rebels have laid down arms. This creates good conditions for setting up the TAPI project. However, bringing the TAPI gas pipeline up to Fazilka from Pakistan is still not conducive as ties between Pakistan and India have much deteriorated after the Modi Sarkar was installed last year. There are now signs of improvement after the heart of Asia conference was convened at Islamabad on 8-9 December, just ahead of the groundbreaking ceremony of TAPI.

The estimated cost of the project was Us$ 7. 5 billion several years ago but the new estimation could go beyond Us$ 10 billion and even more. With the initiation of the Pakistan-China Economic Corridor (CPEC), linking Gwadar with western Chinese city of Kashgar in the autonomous regio0n, when new industrial zones will be built, the importance of the TAPI gains further momentum. For the CPEC, TAPI would be an integral project, also the IP and the CASA-1000. Afghanistan and Pakistan could earn billions of dollars out of transit fee while also reducing hostility prevailing in the region.

For energy companies, the TAPI is a lucrative project. In the 1980s, Us energy firm, Unocal and Argentina's Bridas actively pursued to invest in the project. Taliban and Unocal had reached some understanding. Now it looks that French energy joint, total, is working behind the scenes to capitalized the project. Exxon Mobil and Chevron are also interested in the project. The Asian development Bank (ADB) might also be participating. The ADB has been acting as the TAPI secretariat since 2002.

On 24 October, it was decided that the TAPI Company Ltd will build, finance, operate, and own the project. The TAPI Company Ltd will be having 85 percent shares whereas the buyer countries Afghanistan, Pakistan and India will each be having 5 percent share. However, Turkmenistan has asked Pakistan and India to increase their shares. Turkmenistan wants Pakistan Petroleum Limited, OGDCL and GHPL to invest in the project. The state-owned Turkmengaz has started route survey to construct the pipeline. The company also leads the four countries consortium.

Many say that that the dust surrounded the project for over decades, came clear after the United States gave a green signal when secretary of state John Kerry visited the Ashgabat and the other capital of Central Asian states from October 28 to November 4. This is American response to China's land and maritime silk road strategy.

Recently, Turkmenistan's President Gurbanguly Berdymukhamedov ordered state companies Turkmengaz and Turkmengazneftstroi to begin building the republic's section of the pipeline. Turkmenistan will invest US$15 billion to develop a gas field from where it will transport gas to Afghanistan Pakistan, and India.

Turkmenistan's resources are estimated at 12. 1 billion tons of oil and 6. 1 trillion cubic meters of gas. Now Turkmenistan's gas and oil projects are in the global limelight after the United States has given the green signal. In 2014, Turkmenistan attracted over US$ 3 billion investments in the development of hydrocarbon sources. Over US$10 billion were invested in the Turkmen sector of the Caspian Sea since the foreign companies have begun their activities. The amount is expected to be increased in 2015.

Moreover, Japan has shown a keen interest in up lifting the economy of Turkmenistan after Prime Minister Shinzo Abe visited Ashgabat in November, the first-ever visit by a Japanese leader. South Korean companies have also shown their interests to invest in Turkmenistan's gas projects. Turkish companies have been invited by Turkmen Government for bidding the projects. Pakistan's oil and gas companies should also take interest to invest in Turkmenistan's Caspian Sea energy projects.

The vice Prime Minister of Turkmenistan, Mr. Baymurat Hujamuhammedov, visited Pakistan in August to hold a wide range of discussions, most importantly on the TAPI gas pipeline project. Prime Minister Nawaz Sharif visited Ashgabat on 13 December to attend the groundbreaking ceremony of the pipeline project. The project might be completed in four to four years by 2019. Earlier, Prime Minister Sharif visited Ashgabat in May. Addressing the ceremony, Sharif stated that the presence of regional leaders at the groundbreaking ceremony clearly signaled the importance they attached to this 'game changing project' and their commitment for its early completion.

His visit to Ashgabat became a milestone in energy cooperation between Central Asia and Pakistan a long-cherished dream since 1995. Pakistan could overcome its energy crisis as Pakistan will receive over 60 per cent of its gas needs out of the TAPI project.

TAPI is not just a gas transit initiative connecting energy-rich Central Asia with south Asia, but it is a trailblazing project that would open doors for greater regional connectivity, reducing poverty and cost of energy production, and building new confidence among south Asian countries. Trade between Pakistan and Central Asia will also be boosted. Not only TAPI would help reduce tension between Pakistan and India, Taliban became guardians to protect the project. TAPI is also a step toward the consolidation of the China-Pakistan Economic Corridor in the larger context.
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Publication:The Diplomatic Insight
Geographic Code:9PAKI
Date:Dec 31, 2015
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