Page 10 - FSUOGM Week 41 2021

FSUOGM COMMENTARY FSUOGM

The Turkmen government held talks with the create a non-Chinese export route for the gas in
Taliban even prior to their takeover of the war- Turkmenistan, which is good from the United
torn nation in anticipation of the US troop States’ strategic point of view, but also it would
withdrawal. help with this nation building which is also part
Moreover, both Turkmenistan and Pakistan of the United States’ strategic view,” Pirani added.
have shown support for Afghanistan’s new Tali- “This strategic prospective of the United States
ban-led government, placing the project’s pros- now no longer exists so I think that this reduces
pects in a favourable light from a geopolitical still further the likelihood that this TAPI pipeline
perspective. will ever be built.”
Turkmenistan, though, has committed to An article published by the Atlantic Coun-
covering 85% of the project’s costs, which is cil in September suggested that the pipeline’s
something of a problem as things stand right security is not the pivotal issue for TAPI’s suc-
now as the remote nation appears to be going cess or otherwise. Rather, the article posited
through chronic economic and budgetary issues, that the pipeline financing has always been the
demonstrated by countless reports of Turkmen main obstacle. When the project’s price tag is
citizens plunging ever deeper into poverty. combined with the various upstream costs of
delivering 33bn cubic metres of gas per annum,
Why the project may fail TAPI’s costs would balloon to $40bn, the piece
Simon Pirani, senior research fellow at the said.
Oxford Institute for Energy Studies (OIES), told Considering that Turkmenistan has pledged
New Europe in September that TAPI was already to fund most of the project on its own, the pipe-
economically unfeasible even prior to the Talib- line would only be viable with significant funds
an’s rapid takeover of Afghanistan. from international lenders—Turkmenistan, it
“Basically it’s very hard to see how the eco- seems, has not been able to secure any meaning-
nomics of TAPI can work under any circum- ful financing for the project from banks and pri-
stances,” Pirani said. “Unless you think the high vate energy firms. Now, the necessity of dealing
gas prices will go on for 15 or 20 years, then this with the Taliban may further reduce any chances
project does not work because then it is cheaper of Turkmenistan finding external funding.
to bring LNG [liquefied natural gas] to India or Construction of the Afghan section offi-
to Pakistan and the difficulties of building the cially began in February 2018, but more than
pipeline and the expense of building the pipeline three years later no significant progress has been
mean that this project cannot work.” reported. Further developments on the project
TAPI “was [the US’s] idea of nation building are likely to remain on shaky ground for years
in Afghanistan in that it would not only help to to come. ™

PIPELINES & TRANSPORT

Gazprom mulls larger

Ust-Luga LNG plant

RUSSIA RUSSIA’S Gazprom and its partner Rusgazdo- The project developers also signed a licensing
bycha are considering the construction of a third agreement for a liquefaction technology devel-
Gazprom is considering LNG train at a planned complex in Ust-Luga, the oped by Gazprom and Linde to be as the project.
adding a third train to company announced on October 7. They also hired Russian firm Velesstroy to build
the project. The company said it had signed a memoran- a temporary camp for construction workers. The
dum of intent on the possible extra train with camp will be ready by the end of 2022.
Rusgazdobycha and Germany’s Linde. Linde and Talk of an expansion at the Ust-Luga plant
Turkey’s Renaissance Heavy Industries secured comes at a time when global gas prices are at an
an engineering procurement and construc- all-time high, as a result of a surge in demand
tion contract for the liquefaction complex in and supply constraints. Gazprom CEO Alexei
mid-September, with analysts hailing the award Miller suggested earlier this year that the com-
as a sign of concrete progress at the project. pany might fast-track some new upstream pro-
Under the original plan, the Ust-Luga plant jects in response to bullish market conditions.
were to process 45bn cubic metres per year of gas Gazprom was the first Russian company to
and produce 13mn tonnes per year of LNG, 19 emerge as an LNG exporter in 2009 after bring-
bcm per year of pipeline gas ready for transport ing on stream a plant on Sakhalin Island. But it
to Europe and 3.6mn tpy of ethane and 2.2mn has since been overtaken by Novatek as the lead-
tpy of LPG. Some of these liquids would be used ing LNG developer in the country. But Gazprom
as feedstock at a nearby petrochemicals plant hopes to re-establish its prominence in the sector
that Rusgazdobycha is developing on its own. with the Ust-Luga project. ™

P10 www. NEWSBASE .com Week 41 13•October•2021