The Kabul times, Afghanistan Trustable News Agency.

TAPI gas pipeline project: a catalyst for regional connectivity

Workers stand near a gas pipe during the launching ceremony of construction work of the TAPI project on the Afghan section of a natural gas pipeline that will link Turkmenistan through Afghanistan to Pakistan and India, near the town of Serhetabat, Turkmenistan February 23, 2018. REUTERS/Marat Gurt - RC134AE344A0

By: Muhammad Rafiq

The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project has been planned to bring natural gas from energy-surplus Central Asia to energy-scarce South Asia. According to the TAPI project, Turkmenistan would export its natural gas from Galkynysh, the second largest gas field in the world, to Afghanistan, Pakistan and India through 56-inch diameter pipeline. TAPI pipeline has a length of 1814 km out of which, 214 km is in Turkmenistan, 774 km in Afghanistan and 826 km in Pakistan reaching to the Fazalka region in India. This US$ 10 billion project is for 30 years that was started in 2015, with Asian Development Bank (ADB) acting as the facilitator and coordinator. The project would provide 33 billion cubic meter gas per annum, out of that 5 billion cubic meter going to Afghanistan and 14 billion cubic meter each to Pakistan and India. The pipeline would be supported with six compressor stations. The anchor agency for implementation of the project is TAPI Pipeline Company Ltd. under Turkmengaz, a state entity. Turkmenistan would bear 85% of the project cost while Afghanistan, Pakistan and India would contribute 5% each. Turkmenistan authorities have completed their part of gas pipeline from Galkynysh gas-field to Turkmen-Afghan border. Financial closure of the project is expected in 2021, followed by the start of operation in 2023.
An ancillary project of TAPI is Turkmenistan-Afghanistan-Pakistan (TAP500) is a 500 KV power transmission network that is designed to meet the power shortages in Afghanistan and Pakistan. TAP500 would initially supply 1700 megawatt electricity to Pakistan that would be subsequently raised to 4000 megawatt. The power transmission line will cover 700 km in Afghanistan alongside the TAPI route. The Asian Development Bank (ADB) is providing US$ 150 million to support the implementation of TAP500 in Afghanistan. An additional $50 million USD in transit fees will be earned by Afghanistan from TAP500, once it has been completed. Another byproduct of TAPI is TAP fiber-optic link between Turkmenistan, Afghanistan, and Pakistan whereby trans-Eurasian super network would be established. It would reduce transfer time in internet traffic by more than 30 milliseconds and enable distance learning and telemedicine between member countries. The project would generate some US$ 200 million annual revenues for Afghanistan.
Turkmenistan has 4th largest reserves of natural gas i.e. 50 trillion cubic meters of natural gas, exceeded only by Russia, Iran and Qatar. Since Russia owns exports pipelines of Turkmen gas since USSR times, it refuses to allow the use of its pipeline network. Taking advantage of Turkmenistan’s lack of alternative routes besides China, Russia buys Turkmen gas at meager prices. Therefore, TAPI gas pipeline project is part of Turkmenistan strategy to diversify export routes for energy supply to the global market. Turkmenistan aims multiple export routes: north to Russia, east to China, south to Pakistan and India via Afghanistan, and possibly west to Europe via the Caspian Sea. So, TAPI project provides hefty revenue and export route diversification to Turkmenistan but it is concerned about the pipeline security and political instability.
Second phase of the TAPI project covering 774 km is being carried out in Afghanistan since 2018. The pipeline would pass through Herat, Farah, Nimroz, Helmand and Kandahar provinces. Around 300 industrial units along the pipeline route have already been established that would need gas for operation. Afghan Gas Enterprise (AGE) was nominated by Afghanistan to invest in the project. Afghan authorities have given the deadline of early 2021 to complete its part of the project after necessary minesweeping and ground surveys.
TAPI is the war-torn Afghanistan’s largest development project and its transit revenue would amount to US$ 300 million per year. For Afghanistan, TAPI would also add a spur to Pakistani deep-sea Gowadar port presenting potential for Afghan exports to other countries. The project is a win-win scenario for Afghanistan that also poses a challenge to demonstrate the capacity to ensure the requisite security.
Success at TAPI could attract further mega projects for Afghanistan. Therefore, a common ground with the local power brokers must be created for smooth implementation of TAPI and TAP.
In Pakistan, Inter State Gas Systems (ISGS) has the mandate to implement TAPI by laying down 826 km pipeline from Afghanistan to Quetta, Multan and then to Fazalka in India. After completion of Turkmen gas pipeline till Turkmen-Afghan border, the technical studies of Afghan portion have also been completed. Pakistan is well-aware that TAPI would create job opportunities in backward areas along the pipeline, improve energy deficit and further strengthen the national economy. Pakistan’s energy demand is multiplying due to CPEC projects, establishment of special economic zones and increased industrialization. TAPI accounts for 10% of Pakistan’s energy consumption, 20% of gas consumption. Therefore, Pakistan is very much committed to the TAPI gas pipeline project.
But, on the other hand, the PTI government prudently realizes that import of LNG mechanism provides flexibility to the purchasing country in terms of gas quantities and the supply tenure while the natural gas pipelines once constructed could not be abandoned for being long term liabilities spanning 20-30 years. So, it is commercially unfeasible unless the piped gas is significantly cheaper than the shipped LNG. Pakistani authorities have observed Turkmen gas price to be 5-10% higher than that of LNG available. Hence TAPI Price Negotiation Committee established by the Petroleum Division is already in review process with the relevant counterparts over the price. Then, Pakistan wants the gas to be delivered at Pak-Afghan border, instead of delivery at Turkmen-Afghan border, in order to avoid any transit loss or security risk in Afghanistan. After all, India too has approached Turkmenistan to raise security guarantees for the pipelines to pass through Pakistan territories.
The government of Pakistan is working tirelessly to address its reservations over the ‘gas delivery point’ and ‘gas price’ clauses of the agreement that are against the interest of the country.
Above analysis highlights that once implemented as per timeline of 2023, the TAPI project would serve as a catalyst for shared prosperity, socio-economic development and regional connectivity of Central Asia and South Asia.
It would be a glaring example of international energy cooperation, IT connection, and communication links. TAPI has also the potential to ease tensions between the neighboring countries due to interdependence. Pakistan has assured Turkmenistan to take up socio-economic issues with India separately the way it happened in SAARC conference on COVID-19. India needs to realize that political bias has no compatibility with economic durability. It is important for everyone to recognize the right side of history as we embark upon the rejuvenation of the Great Silk Road through projects like TAPI and BRI.
The writer is Country Manager of a Pakistani bank in Kazakhstan, with interest in Central Asian studies.
This article first published Daily Times

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The Kabul times, Afghanistan Trustable News Agency.