ANALYSIS-Trans-Afghan gas pipeline, the dream that won't die

03 Nov 2011 00:35
Source: Reuters // Reuters

* Pakistan says will soon sign deal to buy gas

* Security fears, political complications dog plan

* Construction many years away, if ever

By Zhou Xin and Daniel Magnowski

KABUL, Nov 3 (Reuters) - On paper, it's one of the sweetest gas deals there is. At one end, the world's second largest gas field; at the other, 1.2 billion people demanding clean energy, and in the middle, countries in desperate need of revenues and jobs.

In reality -- and especially when that reality passes through Afghanistan and Pakistan en route to India -- things are a lot tougher.

Only last week, Pakistan's Petroleum Ministry said it had agreed purchase terms with putative gas supplier Turkmenistan, and would sign a contract in mid-November. An official in the ministry said Turkmenistan would supply 1.3 billion cubic feet of gas per day for 25 years.

For a pipeline that doesn't exist outside of the imagination, it was a bold step.

The idea of a 1,700-km (1,056 miles) pipeline from Turkmenistan to India, known as TAPI, isn't new. In the mid-1990s, Afghanistan's then-rulers, the Taliban, talked to an American energy firm about building it.

Almost 15 years and no gas later, the Taliban have been kicked out of power, thousands have been killed in Afghanistan during the U.S.-led war on militancy, and the Afghanistan-Pakistan border is one of the most dangerous areas in the world -- but the pipeline dream won't die.

"Without peace and stability in Afghanistan, the pipeline may become only a pipedream," said Debidatta Aurobinda Mahapatra, a researcher with the Centre for Central Eurasian Studies at the University of Mumbai.

Violence is at its worst since 2001, according to the United Nations. Foreign forces have already started a security handover in parts of the country, ahead of a full withdrawal of combat troops by the end of 2014. Some fear that when they go, full-scale civil war could break out.

"People are talking about pipelines, roads and railways, and these are all very vulnerable," said Thomas Ruttig, a co-director with Afghanistan Analysts Network in Kabul.

Afghan officials have pledged security forces, and talk about burying part of the pipeline underground, but even then it would still snake through the Taliban heartlands of Helmand and Kandahar in the south of Afghanistan.

"The pipeline is very long and very difficult to defend -- you can't put a soldier every 20 metres," Ruttig said.

The Asian Development Bank earlier this year approved around half a million dollars to pay for consultancy and meetings on the project, but when asked at the end of October, it was no longer talking about TAPI.

According to the Afghan Ministry of Mines, the pipeline would pump 33 billion cubic meters (bcm) a year from the South Iolotan field in Turkmenistan to Fazilka in India, crossing 735 km of Afghan territory, then 800 km in Pakistan.

BETWEEN PROBLEMATIC AND IMPOSSIBLE

Getting Pakistan and India to agree on anything is tough. Relations between the nuclear-armed neighbours, who have fought three wars against each other since their independence from Britain in 1947, are prickly enough to scuttle the project without any help from the Taliban.

"Two of the major stakeholders in TAPI, India and Pakistan, have major differences including security and transit fee, and more importantly, trust," Mahapatra said.

But for Afghans, who continue to endure high energy bills and frequent power cuts even in big cities, the potential benefits are so great that the possibility of the pipeline is worth clinging onto.

"Everyone is waiting for the pipeline project because they believe it will be the cheapest energy they will have to run their business," said Ahmad Khalid Yarmand, head of the Afghan business association in western city of Herat, through which the pipeline would pass.

For the other countries in the plan, it could also be a winning deal. India and Pakistan would diversify their gas supply, while Turkmenistan, a former Soviet republic, wants to triple annual gas exports to 180 bcm by 2030, looking beyond its traditional partner Russia to wider export markets.

Energy experts aren't holding their breath.

"It works economically and is even quite attractive. Needless to say, from the political side, it is somewhere between highly problematic and impossible," said Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies in Britain.

"It depends what route you take across Afghanistan but nothing looks attractive," he said, adding that, in addition to the security problems, the Indians might in any case refuse to take any gas which crosses Pakistan.

"In summary: it's all very difficult." (Additional reporting by Augustine Anthony in ISLAMABAD; Editing by Raju Gopalakrishnan)


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'Iran gas output to top 1.47bn cu.m'

Tue, 08 Nov 2011 10:20:04 GMT

Iran's Oil Minister Rostam Qasemi says the country's natural gas output will rise to 1.47 billion cubic meters per day by the end of the Fifth Five-Year Development Plan (2010-2015).

The minister put the amount of current daily gas production at 630-650 million cubic meters and said, “By the end of the Fifth [Five-Year Development] Plan, most of Iran's [natural] gas will be produced at the joint fields with Qatar and Saudi Arabia,” IRNA reported on Tuesday.

Qasemi said that an increase in oil production is also high on the ministry's agenda, and attached further importance to the production and exports of oil products.

He once again underlined the need to develop joint oil and gas fields and expressed hope for the country's oil and gas output to reach higher levels.

Iran shares oil and gas fields with most of its neighbors in the Persian Gulf region including Qatar, Oman, Kuwait and Iraq.

Earlier in October, Qasemi said crude output of the National Iranian Offshore Oil Company (NIOOC) would climb to one million barrels a day by 2015.

On the oil and gas fields that Iran shares with neighboring countries, the minister said measures have been taken for the speedy implementation of related projects.

Iran is the second largest oil exporter of the Organization of Petroleum Exporting Countries (OPEC).

The country holds the world's third-largest proven oil reserves and the second-largest natural gas reserves.

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Sweden opposes Pakistan’s collaboration with Iran because it said that Iran should clarify its nuclear objectives. PHOTO: AFP/FILE

ISLAMABAD: Sweden has not only opposed the Pakistan-Iran gas pipeline project, but has also said that the alternative pipeline from Turkmenistan is also not viable, DawnNews reported on Friday.

Sweden opposed Pakistan’s collaboration with Iran because it said that Iran should clarify the reservations posed by the international community over Iran’s nuclear objectives.

The country also said that the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline was not workable.

Earlier, a Chinese bank backed off from financing the Iran-Pakistan gas pipeline project. The ICBC was finalised as the financial advisor through an international competitive bidding.

The Industrial and Commercial Bank of China (ICBC) was reluctant to sign the financial advisor contract despite being the lowest bidder.

The financial advisor was responsible for arranging funds for completing the 800-kilometre-long pipeline, at an estimated cost of $1.5 billion.

According to a contract signed in 2009, Iran will supply 750 million cubic feet of gas per day from South Pars fields to Pakistan.

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Gas pipeline: Pakistan hiring experts to study Iran sanctions
By Zafar Bhutta
Published: March 22, 2012

A delegation to depart for Russia to negotiate with energy giant Gazprom. PHOTO: FILE

ISLAMABAD: Amid fears of possible sanctions being imposed by Washington, Pakistan has decided to hire the services of international legal experts to seek opinion on effects of prospective US sanctions, in case it went ahead with the Iran-Pakistan (IP) gas pipeline project.

The decision to hire legal experts was taken at a high level meeting presided over by Prime Minister Yousaf Raza Gilani at the Prime Minister’s House on Wednesday.

The meeting was convened to review the energy situation in the country, expand the power generating capacity of the existing electricity infrastructure and explore alternate energy sources.

The meeting was attended by the Minister of Foreign Affairs Hina Rabbani Khar, Minister of Finance Dr Hafeez Sheikh, Minister of Water and Power Syed Naveed Qamar, Foreign Secretary Jalil Abbas Jilani, Finance Secretary Abdul Wajid Rana, and Deputy Chairman Planning Commission Dr Nadeem ul Haq.

The possibility of US sanctions against Pakistan was discussed, one of the participants of the meeting told The Express Tribune.

He said that the government wanted to explore the possible effects of sanctions if it refused to bow to the pressure exerted by Washington.

“We have discussed the option of materialising the IP gas project with assistance from Russia and China,” the participant said.

The prime minister was informed that a delegation of Pakistanis would soon depart for Russia to negotiate with Russian energy giant Gazprom to materialise the pipeline project.

He also directed the ministries of water and power and petroleum to ensure that load shedding was minimised, and further efforts be made to provide relief to the public and the industry from the ongoing power crisis.

Published in The Express Tribune, March 22nd, 2012. =============== TAPI project: Top US firms drop out of race to finance gas pipeline By Zafar Bhutta Published: September 23, 2014 Share this article Print this page Email . Seeing an empty field, now Total of France and Malaysia’s Petronas have entered the fray and are expressing interest in gas exploration in Turkmenistan. PHOTO: STOCK IMAGE ISLAMABAD: Top US energy companies – Chevron and ExxonMobil – have dropped out of the race to become a consortium leader in financing the Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline following dismissal of their demand for an equity stake in the project. The two companies were seeking shareholding in the field from where Turkmenistan would supply gas to energy-starved Pakistan, Afghanistan and India in response to their commitment to providing funds for laying the gas pipeline, officials say. However, Turkmenistan turned down the request, forcing the companies out of the competition to become the team leader. Turkmenistan desires to award offshore gas extraction contracts to Chevron and ExxonMobil, but for that it needs to change the rules. According to the officials, seeing an empty field, now Total of France and Malaysia’s Petronas have entered the fray and are expressing interest in gas exploration in Turkmenistan without seeking any stake. “The government of Turkmenistan is negotiating with Total and Petronas a services agreement which is expected to be finalised in two months. The two firms could work as the consortium leaders,” an official said. “After receiving reports from Turkmenistan, Pakistan will again engage into talks with the central Asian state.” The Afghan government says it does not require the entire committed volume of gas and only needs a part of it. The remaining quantity will be shared by Pakistan and India. “For the pipeline, a route survey will be undertaken. Its engineering design is also yet to be prepared,” the official said. Under the TAPI project, which is expected to cost over $10 billion, Pakistan will get 1.365 billion cubic feet of gas per day (bcfd) from Turkmenistan, India will also receive the same 1.365 bcfd and Afghanistan will get 0.5 bcfd. Turkmenistan will export natural gas through a 1,800km pipeline that will reach India after passing through Afghanistan and Pakistan. Pakistan and India have already signed gas sale and purchase agreements and efforts are under way to attract potential investors for financing the project. Earlier, energy giant Chevron had emerged as the potential leader in a consortium that will finance and run the transnational TAPI pipeline. The four countries linked with the project are currently in the process of setting up a consortium and selecting a technically capable and financially sound company as the consortium leader, which will design, finance, construct, own and operate the gas pipeline. Published in The Express Tribune, September 23rd, 2014. Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation. ===========================================