Turkmenistan has fired the starting pistol on the ambitious TAPI natural gas pipeline, a 1,735-kilometer route intended to supply markets in Afghanistan, Pakistan and India.
To the applause of ministers, President Gurbanguly Berdymukhamedov announced he had ordered the beginning to construction on November 6 during the weekly Cabinet meeting.
The work on the Turkmen section will be done by state-run gas company Turkmengaz, which was named project consortium leader for TAPI Pipeline Company Limited in August, and energy infrastructure construction division Turkmenneftegazstroi.
The pipeline is designed to transport 33 billion cubic meters of gas annually for a period of three decades. Work is formally due to start in December, according to the government decree signed by Berdymukhamedov, but substantial construction is not expected to get underway until next year. The completion date has been set for December 2018.
Turkmenistan currently exports gas to China, Russia and Iran. But relations between Turkmenistan and Russia, which this year reduced the volume of its gas purchases to 4 billion cubic meters, took a turn for the worse after Ashgabat in July accused Russia's Gazprom of failing to pay for fuel supplied this year.
It was not all good news on the energy front at the Cabinet meeting though.
The long-serving minister for oil and gas, Baymurad Khodjamukhamedov, asked Berdymukhamedov if he could step down for reasons of ill-health, in effect a resignation, which was promptly accepted by the president.
Khodjamukhamedov, who had occupied his post since 2009, will be replaced by Yagshigeldy Kakayev, who is now the head of the presidential State Agency for the Management and Use of Hydrocarbon Resources. Kakayev will continue to perform his current job on top of taking on ministerial duties.
The pipeline intended to forge a new export route through Afghanistan for Turkmenistan’s natural gas riches has made a fresh stride with the naming a consortium leader for construction.
Turkmenistan’s state news agency reported on August 6 that state-owned Turkmengaz will be in charge of bringing TAPI — named for the initials of the four countries it crosses — into existence.
The decision was taken during a TAPI management committee meeting in Ashgabat, the Turkmen state news agency reported. Senior officials from the Asian Development Bank, which is acting a transaction adviser on the project, were also in attendance.
“In its capacity as leader of the consortium of the TAPI Limited pipeline company, Turkmengaz will head coordination on construction, financing, management and use of the TAPI pipeline,” said an official statement cited by the state news agency.
Backers of the project, which include the United States and the European Union, appear to be unfazed by occasional and loosely sourced reports of unrest along the Turkmen-Afghan border that would stand to disrupt any major construction work. Security issues do not typically feature in official statements on TAPI, which suggests either that anxieties are overblown or that the parties to the project are simply hoping for the best.
The statement notes that Turkmengaz has more than 50 years experience in the development and transportation of gas resources, as well as in the construction of pipelines. But it also notes hopefully that other large companies will join the consortium as the project moves forward.
Pakistani Prime Minister Nawaz Sharif rounded off an energy-themed jaunt across Central Asia on May 22 in Bishkek, where he spoke about electricity exports to his energy-starved nation two days after visiting Turkmenistan to discuss a troubled gas-pipeline project.
The trip demonstrated Pakistan’s limited leverage in its dealings with Central Asia and, publicly at least, did not produce much of substance.
In Ashgabat, Sharif called on partners to “intensify work” on the long-stalled Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. In his meeting with Turkmenistan President Gurbanguly Berdymukhamedov on May 20, Sharif called TAPI a “project that would bring benefits to the entire region.”
But the pipeline, which would traverse Afghanistan and has been on the drawing board since the mid-1990s, may cost over $10 billion. With no commercial investor so far, initiative rests with both Turkmenistan, the would-be-supplier, and the main export market, India. Delhi must decide if its own energy deficit warrants pushing a link that many see as risky and expensive.
Neither president mentioned either the hoped-for 2017 TAPI completion date, or the more pessimistic projection of 2020 mentioned in late April by Afghan President Ashraf Ghani. (Many say both timelines are still pipedreams.)
As delegates from the four countries hoping to build a gas pipeline from Turkmenistan to South Asia met on February 11 in Islamabad, Pakistani media claimed that a deal is close. Several outlets reported that French energy major Total may lead the long-delayed project, providing much-needed know-how and capital.
Other than rumored ambivalence towards the Turkmenistan-Afghanistan-Pakistan-India pipeline project in Islamabad and Delhi, the lack of a major commercial investor has been a key obstacle for TAPI. Turkmenistan’s refusal to allow any outsider an equity stake in an upstream field has been another stumbling block, with India reportedly pressuring Turkmenistan on February 11 to change its mind.
But The Daily Times, a Pakistani newspaper, claims a deal is imminent. Citing an unnamed official in the Pakistani Ministry of Petroleum and Natural Resources, the newspaper clarified that Total would not be the owner of the pipeline – which is the privilege of a company created by the four countries called TAPI Ltd. – but would instead assist the Turkmen at the source:
Under a proposed deal, Total will help extract gas from Turkmenistan’s fields, which will be exported to Afghanistan, Pakistan and India. In return, the company will be paid a service fee in cash or in kind. Sources in the energy sector said that gas companies of the four countries have already established a company to build, own and operate the 1,800km TAPI natural gas pipeline. The four state-owned companies will hold an equal share in the pipeline operator.
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.
A long-stalled project to deliver Turkmen gas to Europe is again in the spotlight after a European Union official said the idea remains on the table.
Denis Daniilidis, the head of the EU mission in Ashgabat, told an oil and gas conference in the Turkmen capital on November 19 that negotiators are finalizing a deal to construct a pipeline from Turkmenistan to Azerbaijan across the Caspian Sea, bypassing Russia, Russia's RIA Novosti news agency reported.
According to the diplomat, negotiators are working on "some outstanding issues,” RIA said. The EU, Turkmenistan and Azerbaijan will sign an agreement on related environmental issues this year, he added.
The trans-Caspian pipeline project is part of the EU-sponsored Southern Corridor that would deliver natural gas from Central Asia, the Caucasus and the Middle East to Europe while easing Europe’s dependence on Russian gas. Russia and Iran oppose the construction of any pipeline across the Caspian Sea, citing the unresolved status of the sea and maritime borders. But both have done little in 22 years since the breakup of the Soviet Union to remedy the issue, and both have been accused of creating obstacles to alternative energy corridors.
Turkmenistan is looking south, not west, to realize its pipe dreams.
Speaking at an annual oil and gas conference in Ashgabat last week, Turkmen officials spent a lot of time praising the proposed TAPI pipeline to south Asia. They reportedly did so at the expense of plans to construct a pipeline to export Turkmenistan’s vast gas reserves to Europe.
TAPI – named for the four countries it would cross: Turkmenistan, Afghanistan, Pakistan and India – is “regarded with suspicion as a wildly ambitious pipedream by some analysts,” AFP said, especially because it would traverse war-torn Afghanistan. Ashgabat signed onto the project at the urging of the Asian Development Bank and Washington in May. In 2008, it was estimated to cost $7.8 billion.
Turkmen officials “took every opportunity to talk up the pipeline while showing less interest in a similar project that would transport gas across the Caspian” to Europe, AFP reported:
“The realization of the TAPI pipeline project will allow an increase in exports of Turkmen gas,” President Gurbanguly Berdymukhamedov was quoted as saying in a formal statement for the conference.
Sakhatmurad Mamedov, head of the state-owned company Turkmengaz, announced that the project had been ‘successfully pushed forward’ in roadshows held in September with potential investors in Singapore, New York and London. “The realization of the TAPI project will give an impulse to the development of the countries taking part in the project and will also strengthen stability in the region as well as creating new jobs,” he said.
If -- and it’s a big if -- the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline moves from being a figment of inter-governmental imagination to being an actuality of pipe full of actual gas, Kabul stands to make a mint.
Turkmenistan stands to make a lot of money too, but not as much as it would like.
In 2008, Ashgabat was looking for $457 per ton of gas. Sources quoted by The Economic Times, an Indian business paper, however, suggested on December 13 that Ashgabat would sell gas for TAPI at a rate of $272 per thousand cubic meters (tcm). (By contrast, the rate Turkmenistan agreed for China was only $195 per tcm.)
Delhi should expect to pay $362 per tcm by the time charges and transit fees to Afghanistan and Pakistan are factored in, however. Turkmenistan wants to sell 33 billion cubic of meters of gas to India and Pakistan. Afghanistan wants to rake in transit fees ranging from a $1 billion to $1.4 billion annually. Pakistan and India want to keep gas prices for their ever growing number of consumers low and 33 billion cubic meters should just about do it.
But is the promise of $1.4 billion in transit fees enough to bring stability to southern Afghanistan, the persistently volatile area, through which the pipeline must pass? Some Afghan observers say it might be.
Others say the TAPI is just another flammable item in an explosive region.
“The situation in southern Afghanistan is no more stable now as it was when Bridas and UNOCAL were duking it out for control of the pipeline,” Candace Rondeaux, International Crisis Group’s senior analyst in Kabul, told EurasiaNet.
“Internally, of course, no one can say for certain how to stabilize Nimroz, Helmand, and Kandahar enough that work could begin on such an
Prikaspiisky Pipeline (1), East-West (3), Turkmen-China (5), TAPI (6),
A week after President Dmitry Medvedev's visited Ashgabat and Russian media gave a positive spin to his talks about the Turkmen-Afghanistan-Pakistan-India (TAPI) pipeline, the Turkmen Foreign Ministry has lashed out against Moscow's upbeat claims about the meeting.
According to a report from turkmenistan.ru, the Foreign Ministry issued a statement October 28, denying the Kremlin's version of the story of meetings between President Medvedev and President Gurbanguly Berdymukhamedov October 21-22. Ashgabat makes it clear in the frosty rebuttal that it has not endorsed Russia's participation in TAPI at all, and that any outside funders or contractors would be selected by the TAPI parties as a group.
Although Russian media portrayed both the Russia and Turkmen leaders agreeing to freeze the Prikaspiisky pipeline due to the current downturn in European demand, the Turkmen Foreign Ministry seems to take exception to this stark characterization, saying that Turkmenistan had already built its part of the pipeline -- and indicating that "apparently Russia does not wish to fulfill its commitments."
The Foreign Ministry's statement also addressed Russian Deputy Vice Premier Igor Sechin's dismissal of the Nabucco project as unworkable, and indicated that Ashgabat would pick and chose its partners and projects, including with Europe, as it pleased.
In particular, with reference to official persons of the Russian Federation, [the media] speaks about some "freezing" of the Prikaspiisky pipeline project, as well as a lack of prospects for Turkmenistan in cooperation in the Europe-oriented gas sector. At the same time, claims are made about the readiness of the Russian companies to "hook up" with implementation of the TAPI gas pipeline project.
Press Service of the President of Russian Federation, kremlin.ru
President Dmitry Medvedev and President Gurbanguly Berdymukhamedov in Ashgabat, October 22, 2010
During his visit to Ashgabat October 21-22, Russia's President Dmitry Medvedev discussed the possibility of Gazprom, Russia's state-owned gas monopoly, becoming involved in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, Russian and international wire services reported.
Kommersant, the Russian business daily, has more details. President Medvedev brought with him Vice Premier Igor Sechin, Foreign Minister Sergei Lavrov and presidential aide Sergei Prikhodko. The Kremlin is so eager to get involved in TAPI that as Sechin told Kommersant, Gazprom is prepared to take part in any capacity -- "as a contractor, as a designing company, and as a full-fledged participant of the consortium." Sechin says Gazprom is willing to invest its own money in the risky project, which would involve laying pipe across Taliban-held territory in Afghanistan and Pakistan. "Not a single investor has displayed such boldness," comments Kommersant.
Turkmenistan's President Gurbanguly Berdymukhamedov has energetically and enthusiastically promoted TAPI in recent months, bringing the TAPI ministers together at meetings in Ashgabat in anticipation of a December meeting of heads of state to finalize an agreement. The parties announced that they were prepared to bid out the job of building the pipeline to a "global energy giant"-- which was not specified, although analysts were oriented toward expecting a Western energy company.
Russia's interest in TAPI could be motivated by reluctance to see Turkmenistan bypass Moscow-dominated energy corridors to sell gas to the West, says Kommersant. Russia is said to have lost interest in the Iran-Pakistan-India (IPI) pipeline, which