20 November 2014

Turkmenistan to pipe gas to Afghanistan, India and Pakistan

KIRAN SHARMA, Nikkei staff writer
November 17, 2014 10:30 pm JST

NEW DELHI -- State energy companies in Afghanistan, India, Pakistan and Turkmenistan have established a joint venture to build, own and operate an ambitious 1,800-km pipeline exporting natural gas from resource-rich Turkmenistan to the other three countries over a 30-year period.

The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline -- dubbed the Peace Pipeline in this terrorism-infested part of Asia -- has been incorporated as a special purpose vehicle (SPV) in the Isle of Man, a British crown dependency located in the Irish Sea. The SPV is responsible for finance, design, construction, operation and maintenance of the TAPI pipeline.

State-run natural gas companies Afghan Gas Enterprise, GAIL of India, Inter State Gas Systems of Pakistan and Turkmengas have taken equal shares in the TAPI Pipeline Company (TPCL).

The project was conceived in the 1990s between Afghanistan, Pakistan and Turkmenistan, and India joined in April 2008. At that time, the project cost was estimated at $7.6 billion. The pipeline will handle exports of up to 33 billion cubic meters of natural gas annually, and is due for completion by 2018.

"GAIL is vigorously pursuing this project which has the potential to transform the region by contributing to energy security and social and cultural exchange between the four participating countries and their peoples," a GAIL spokesperson told the Nikkei Asian Review.

The Asian Development Bank (ADB), which was appointed as the transaction advisor for the project in November 2013, has recommended that TPCL identify a consortium leader to take a substantial stake in the company and spearhead construction and operations.

"Establishment of [TPCL] is a key milestone in the development of the pipeline," said Klaus Gerhaeusser, director general of ADB's Central and West Asia Department. "It is a tangible sign of transformational cooperation among the parties that presages the enhanced energy security, business prospects, and overall peace and stability in the region promised by the pipeline."

Turkmenistan has the world's fourth-largest proven gas reserves. The pipeline will enable the landlocked country to diversify its gas exports to the southeast, and provide a key new energy source to Afghanistan, India and Pakistan.

The natural gas comes from the Yolotan Osman (Galkynysh) fields in Turkmenistan. The pipeline will carry 90 mmscmd (million metric standard cubic meters per day) of natural gas, of which India and Pakistan will receive 38 mmscmd each and Afghanistan 14 mmscmd.

Afghanistan will initially absorb volumes of between 1.5 and 4 mmscmd only, with residual volumes available for equal sharing between India and Pakistan.

The British engineering company Penspen announced last month that it has been awarded a contract by ADB to carry out a technical feasibility study for the pipeline, which will enter India at Fazilka in the northern state of Punjab.

Penspen's scope of work includes reviewing the proposed route, confirmation of hydraulics, specifications and locations for compressor stations, cost estimates and formulation of the project's execution strategy and schedule.

"We are proud to be involved in this major project, which will enable Turkmenistan to monetize a part of its vast natural gas reserves, by opening a southerly route to the energy-hungry markets of South Asia," Peter O' Sullivan, Penspen's chief executive, said last month.

Penspen's study is expected to take six months to complete. The TAPI project has U.S. backing, and is expected to facilitate development in war-torn Afghanistan.


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