A major Pakistani newspaper has argued that the long-stalled Turkmenistan-Afghanistan-Pakistan-India gas pipeline (TAPI) is unlikely to be built anytime soon. The link is increasingly vital to Turkmenistan’s ambitions of being an independent force in the regional gas market, and reducing its dependence on its main buyer, China.
But while all four countries have signed off on the project, there are a number of reasons it may not come to fruition, according to Dawn, one of Pakistan’s largest English dailies.
There had been excitement in recent months that after years of talk, TAPI was entering the business stage. On the back of a four-country steering committee assisted by the Asian Development Bank in November, Turkmen President Gurbanguly Berdymukhamedov noted in December that “there is now no doubt that [TAPI] will be realized, moreover in the very foreseeable future.” European major Total and Malaysia’s Petronas are rumored to be interested in building the pipeline.
But referring to the same steering committee meeting held in Ashgabat, Dawn notes the very earliest gas could be expected to flow is 2019, three years later than anticipated, and potentially too late for India.
Given this delay, India has indicated revisiting its plan to be a part of the project; whether it would really need the gas from Turkmenistan after 2018 is questionable because it is already a major player in the Singapore LNG futures trading.
This view tallies with what Rahul Tongia, an energy expert with Brookings India, told EurasiaNet.org back in November before the Joint Steering Committee meeting: “Turkmenistan-sourced gas would need to be measurably cheaper than LNG to overcome any security concerns,” Tongia said. LNG might be more expensive but it offers India flexibility. Delhi, Tongia explained, is not keen to depend on arch-rival Pakistan for transit.
Pakistani consumers may also have second thoughts. Pakistan’s energy system is creaking, debt-ridden and inefficient, but consumers pay fairly low rates for domestically produced natural gas. If Pakistan were to import gas from Turkmenistan via TAPI, Dawn adds, their prices would rise, making the agreement politically problematic.
Moreover, Pakistan may have to buy a fifth more of the gas shipped via TAPI than originally envisioned “because of Afghanistan’s inability to absorb 300 million cubic feet per day of its allocated share,” according to Dawn.
Finally, Islamabad wants France's Total in charge of the pipeline, and is apparently unwilling to accept the idea of anyone else – including Chinese firms – building or operating the link. Writes Dawn:
The problem with Islamabad’s desire is that unless the scope of finding a consortium leader is expanded beyond Total, as sought by the other partners, none of the three major and original partners — Turkmenistan, Pakistan and Afghanistan — have the credit guarantee credentials to back the joint venture.
Of course, one of the main stumbling blocks has been Turkmenistan’s insistence it will not share ownership of its supergiant gas fields with any foreign company. So, says Dawn:
major companies, including those from the main supporter to the mega scheme — the United States — also seem to be out of the game, at least for now. Even ExxonMobil and Chevron, which were originally pushing for the project, do not see any attraction in it without shareholding in the field. That is also the case with Petronas of Malaysia.
This is all bad news for Turkmenistan, where hydrocarbons account for 90 percent of exports. With oil prices in a trough and natural gas prices depressed, Turkmenistan will need to export more to keep its command economy in check (witness the sudden 19 percent devaluation of the manat on January 1). For the moment, its economy is pegged almost entirely to Chinese demand.