India is working on its action programme to facilitate the construction of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project which has the blessings of the United States Government. India is still to decide on its participation in the Iran-Pakistan-India (IPI) gas pipeline project which is objected to by US, but it has taken speedy measures to ensure that its interests in the TAPI project are protected.

Indian Government has instructed the public sector gas transportation company Gas Authority of India Ltd (GAIL) to participate in the equity capital of the consortium which will be set up to undertake the construction of the TAPI project. So far US companies Chevron, Exxon Mobil and the Russian company Gazprom are among those that have shown interest in being part of the consortium and the final decision on the consortium will be taken by the four participating countries in consultations with the Asian Development Bank which will be involved in arranging finances for the Project.

Interestingly, India took the early initiative in seeking Russian participation in the TAPI project and now Afghanistan, Pakistan and even Tajikistan have welcomed Russia’s interest in joining the proposed TAPI project linking the four countries. India in fact feels assured at Russian involvement in TAPI project since it feels that this will help in countering the US domineering of the TAPI construction in view of the possible presence of the leading US oil companies in the consortium to be set up soon.

ADB is interested in having major US representation in the consortium and ADB will render technical advice with regard to the terms and conditions for potential consortium partners and be involved in the final selection process. Once the Gas Sale and Purchase Agreement (GSPA) has been signed, all TAPI member countries, with assistance from ADB, will work towards finalisation of the consortium whose mandate is to build the pipeline and operate it for thirty years.

The three buyers - Afghanistan, Pakistan and India will be paying transmission fee to the consortium for the gas utilized from the pipeline. All sides want the consortium to be financially capable, technically competent and politically adaptable for building and operating the pipeline. According to the Indian sources, the gas price formula which will determine the price payable to Turkmenistan by India remains to be finalized. There have been already two bilateral meetings with Turkmenistan to inch closer towards agreement.

Over and above the gas price, the Indian side has to finalise transit fees payable to both Afghanistan and Pakistan. The TAPI project envisages constructing 1680 km of pipeline with a total gas capacity of 90 mscmd. The length of pipeline in Turkmenistan, Afghanistan and Pakistan upto the Indian border is 145 km, 735 km and 800 km respectively. Around 30 billion cubic metres of Turkmen natural gas will be supplied through the pipeline every year.

Meanwhile, international oil industry sources said, Turkmenistan, central Asia’s largest producer and exporter of natural gas is keen to reduce its dependence on gas exports to Russia, supplies to which fell sharply in 2009 due to global crisis. In April 2009, Gazprom halted Turkmen gas imports until the start of 2010 after a pipeline blast disrupted flows. Turkmenistan is hoping to triple natural gas output to 230 billion cubic metres by 2030 and export 180 billion cubic metres, has sought to build alternative export routes.

The European Union has agreed to negotiate a treaty with Azerbaijan and Turkmenistan to bring their natural gas to Europe across the Caspian Sea. The proposed pipeline, part of a planned corridor of links known as the Southern Corridor, is designed to reduce EU dependence on Russian gas imports. Further, in an attempt to boost gas exports and bypass Russia, Turkmenistan has boosted supplies to next door Iran, launched a pipeline to China and made progress on the planned TAPI pipeline.

Simultaneously, Ukraine, embittered by Russia’s unwillingness to cut prices for its gas, is trying to resume imports from Turkmenistan. Energy starved Ukraine which buys up to 60 per cent of the natural gas it consumes, has to export the fuel across Russia via the pipeline network of Russian company Gazprom. Besides buying gas from Russia, Ukraine also transports it on to Europe and the row between Kiev and Moscow is already evoking memories of similar disputes in recent years which cut gas supplies to European consumers in winter. (IPA Service)