ADB: TAPI gas pipeline making steady progress

A proposed 1,800-km pipeline that would transport as much as 33 billion cu m/year of natural gas from Turkmenistan across Afghanistan to Pakistan and India is making steady progress, an Asian Development Bank official said.

The Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project, which Unocal Corp. and others originally proposed in the 1990s, has reemerged in the last 6-8 years as an energy and economic development vehicle, said Rune Stroem, who directs the Energy Division in ADB’s Central and West Asia Department.

“Pakistan is starving for gas, and India is looking to diversify,” he said as part of a broader June 5 discussion on the region’s energy development challenges at the Center for Strategic and International Studies. “ADB is trying to be the glue among the four countries. Our primary benefit is our neutrality.”

Representatives signed a framework agreement for the TAPI pipeline in 2010 and completed buy-sell agreements in 2011 and 2012, Stroem said. The next steps include reaching operating and transit fee agreements, formally establishing a consortium, preparing a feasibility study and market memorandum, lining up financing, and conducting bidding, he indicated.

“Turkmenistan and the three other countries which would buy its gas already have a pricing agreement,” Stroem said. “We simply tried to bring them together and didn’t mind being thrown out of the room when final negotiations began. That was their business.”

He said Pakistan particularly wants to see the $8 billion project move ahead because the country’s 35% reliance on fuel oil to generate electricity represents 75% of its total energy costs.

“The financial community has said money won’t be a problem,” Stroem said. “The institutions are excited to participate. We’re trying to design facilities to let them do so. Commercial supply terms are being drawn up. Force majeure events are still a major concern. It’s important to make sure service to the end-customers isn’t interrupted.”

He said he doesn’t believe construction of another gas pipeline from Iran—assuming its government resolves disputes with the West—to Pakistan might undermine TAPI’s appeal. “There’s no competition between these two projects,” he said. “Pakistan would have no trouble using the extra gas. It also would improve India’s fuel balance.”

Contact Nick Snow at nicks@pennwell.com.

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