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Turkmenistan keeps

believing in TAPI pipe dream

PIPELINES & TURKMENISTAN has been seeking to reach Islamabad might use the pipeline’s gas flows as a
TRANSPORT new natural gas markets since the 1990s via a political weapon.
proposed pipeline through Afghanistan, Paki- There are ample gas resources to underpin
stan and into India. Decades on, it is still far from TAPI, with Turkmenistan hosting the world’s
delivering on that ambitious plan. fourth largest proven gas reserves, estimated by
The Turkmenistan-Afghanistan-Paki- BP at 19.5 trillion cubic metres. But analysts have
stan-India (TAPI) project calls for the construc- raised doubts about Turkmenistan’s ability to
tion of an 1,800-km pipeline that would export manage the development of this gas and ensure
up to 33bn cubic metres per year of Turkmen stable supply to customers. While other large gas
gas. Turkmenistan formed the TAPI Pipeline deposits in the Central Asian state are owned by
Company (TPLC) in 2015 to manage the project, Chinese concerns, the planned source of supply
ceding 5% shares each to Afghanistan, Pakistan for TAPI, Galkynysh, is operated solely by Turk-
and India. men state-owned gas company Turkmengaz.
Under the latest schedule indicated by Turk- Then there are questions about whether there
men authorities, the project had been due to is a sufficient market for TAPI’s gas in India and
reach financial close before the end of 2019. That Pakistan. Since initially pledging support for
goal was not achieved, though, and according to the project, both countries have embarked on
Pakistani press reports this week, is unlikely to strategies to cover rising gas demand with LNG
be reached until 2021. Citing sources, the Kara- supplies. TAPI’s gas would have to compete with
chi-based News International said this meant the sea-bound imports, currently priced at a record
pipeline would not start flowing until 2023. low.
Even this may be wishful thinking by the pro- This explains why Pakistan has asked Turk-
ject’s proponents. TAPI’s projected cost has been menistan for a lower gas price, according to
widely reported at $10bn, leaving Turkmenistan Pakistani media reports. Islamabad has also
on the hook for $8.5bn, with its partners each asked for the gas delivery point to be moved
covering $500mn. Turkmen state media claimed from the Turkmen-Afghan border to the
in the past that the Saudi-based Islamic Devel- Afghan-Pakistani border. This would mean that
opment Bank (IDB) and the Philippines-based Turkmenistan paying for transit and assum-
Asian Development Bank (ADB) had offered a ing responsibility for supplies through restive
combined $1.5bn in project financing in 2016. Afghanistan – a significant concession.
But such arrangements were never confirmed India said it was seeking a price revision from
by the banks. Turkmenistan last year.
Several major international banks have
expressed interest as well, including Deutsche Status on the ground
Bank, Credit Suisse and Credit Agricole, but no Even without financing in place, Turkmenistan
firm commitments have been made. has nevertheless pushed ahead with construc-
tion of TAPI’s 200-km section in its territory.
Hurdles TPLC went so far as to claim in 2018 that the
An obvious reason for investors’ reluctance to Turkmen section had been completed, although
back TAPI is security concerns in Afghanistan this proved to be false. It was only in April last year
and to a lesser extent in Pakistan. Insurgents that Russia’s Sberbank approved a letter of credit
remain very active in the regions that the pipe- (l/c) for a $219mn contract won by a Russian pipe
line would traverse. Another stumbling block manufacturer, Chelpipe, to supply the necessary
is lingering hostility between India and Paki- pipes. Chelpipe then confirmed in January this year
stan. The Indian government is concerned that that those pipes had been delivered.

P4 www. NEWSBASE .com Week 25 25•June•2020