TAPI Pipeline Prospects

TRANSCEND MEMBERS, 20 Dec 2010

Debidatta Aurobinda Mahapatra – TRANSCEND Media Service

The leaders of four nations Turkmenistan, Afghanistan, Pakistan and India (TAPI) met in the second week of December 2010 in the capital of Turkmenistan, Ashgabat to sign two agreements called Inter Governmental Agreement (IGA) and Gas Pipeline Framework Agreement (GPFA) to foster the prospects of TAPI pipeline. The agreements will boost the prospects of the pipeline as they lay down the terms of gas supply and inter-governmental cooperation. The 1680 km pipeline estimated to cost $7.6 billion, will supply India and Pakistan about 1.2 billion cubic feet of gas and to Afghanistan 700 million cubic feet gas per year from Turkmenistan’s southern Yoloten-Osman and Dowletabad gas fields. The successful completion of pipeline, projected at the year 2014, will undoubtedly meet significant energy requirements of the three countries of the region. The pipeline will pass from southern gas fields of Turkmenistan and reach by crossing Afghanistan Pakistan’s national gas network at Multan, and then cross to India and reach the Fazilka point in the Indian state of Punjab. Though it will be premature to pronounce the certainty of pipeline deal at present because there are other crucial agreements such as Gas Supply Purchase Agreement (GSPA), Gas Transportation Agreement and Host Country Agreement are yet to be signed. However, despite the differences of perceptions among the parties the deal has moved forward substantially.

India’s initial hesitation to accept the responsibility for security of the gas delivered from Turkmenistan for its consumption, as the pipeline will pass through some of the most turbulent places in the world such as fragile areas of Afghanistan and Pakistan, raised fears about India’s participation in the project. The TAPI project was initially TAP project, initiated in 1995, but India was later invited to participate in the project in 2008. The earlier visit of Turkmenistan President to India in did not cut much ice regarding the pipeline deal, though both the sides expressed optimism about the future of the deal. There are two major issues that mar the prospects of the deal at least from the Indian perspective. First, the lack of security that whether the gas delivered from the Turkmen fields will reach India or not as it will be subject to vagaries of fragile regions through which it will pass. Second, even so far, there is no concrete agreement as to the exact fixing of the price of the gas. There was apprehension in the past months that India will likely withdraw from the deal, and the TAPI will again convert into TAP pipeline.

As per the present plans, the four countries will take joint responsibility to ensure safety of gas transferred through Afghanistan and Pakistan. India has agreed that the Indian gas company, Gas Authority of India Limited (GAIL) will take the delivery of TAPI gas at the Turkmenistan-Afghanistan border. India’s renouncement of its earlier resistance regarding taking responsibility for safety of the gas to its territory may be motivated by the following factors. India, which does not have established a firm foot in the Central Asian space after the Soviet breakup, is not interested to further weaken its relations with the region, and perhaps giving up the space to Pakistan to play its cards. Also India, which is an energy hungry country and which is also one of the largest energy consumers in the world, is keen to explore energy deals with the resource rich countries in Central Asia including Turkmenistan which is the fourth largest gas rich country in the world. Besides, the other proposed pipeline from Iran, called the Iran-Pakistan-India pipeline has been fraught with multiple problems. Besides other factors, the sanctions on Iran and objections to the pipeline from some major powers like the US have weakened its prospects.

There are other factors as well. India-Pakistan rivalry in Afghanistan may have linkage to this pipeline politics. Pakistan has strongly resisted India’s presence in Afghanistan, and this policy of Pakistan is well known. Pakistan considers Afghanistan as its strategic backyard, and it must have a major voice in the affairs of Afghanistan. India too considers the regions as matter of its strategic interest, and it has already committed US $2 billion for economic development in Afghanistan. Hence, the participation of India in the pipeline project may provide India some ground to work in the regional format not only for purposes of meeting its energy requirements but also for maintenance of peace and stability in the region. As Ministry of External Affairs of India stated, “TAPI project would be a signal of India’s commitment to Afghanistan’s emergence as an economic hub linking Central and South Asia… (It) would be an example of regional cooperation and would support the ‘regional approach’ to resolving the situation in Afghanistan.”

The project at present is being supported by the Asian Development Bank. After the signing of the agreements, the project will be open for investment by competitive bidding. Many players in the region have expressed interests to join the project. Russia’s Gazprom has expressed interest in the pipeline. Though it is difficult at present to predict what shape exactly the pipeline politics will take place, the importance of the pipeline as an energy corridor in Central Asia cannot be ignored. The complex issues still unresolved, it is the principle of who gives what and who gets what and with what bargaining power and leverage will determine the success or the failure of the pipeline. There are speculations that the price, in the context of India, will be left to GAIL India, and the Turkmengaz, the Turkmenistan gas company to decide the matter. As India’s Petroleum Minister, Murli Deora observed, “The pricing issue will come when the consuming nations sign the gas sale purchase agreement with Turkmenistan, expected at a later date.”  Issues remain many but the signing of the IGA and GPFA is no small achievement towards making the pipeline a reality.

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Dr Debidatta Aurobinda Mahapatra is part of the research faculty at the Centre for Central Eurasian Studies,   University of Mumbai, India. His areas of interests include Conflict and Peace, Kashmir, Terrorism and Strategic Aspects of Central Eurasia.

 

This article originally appeared on Transcend Media Service (TMS) on 20 Dec 2010.

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