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Pakistan confirms commitment to the TAPI pipeline

Delegates to the Asia Gas Partnership Summit in New Delhi broke into applause after Pakistan confirmed its commitment to the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline

“I very proudly join my hands with the Indian, Afghanistan, and Turkmenistan governments in the TAPI project,” Ministry of Petroleum and Natural Resources secretary Muhammad Ejaz Chaudhry, told delegates. “Let’s not fight.  Let’s integrate, let’s cooperate.”

He added that construction could start in eight to 10 months time. The pipeline could be complete within two-and-a-half years, with first gas in 2016. Chaudhry also said Pakistan’s natural-gas fields were depleting, and TAPI supply would offset a fall in domestic output.  

Rune Stroem, director of energy at the Asian Development Bank (ADB), later told  the summit more progress had been made with TAPI in the last two years than the previous 15 years, adding an inter-governmental agreement for the 1,800 km pipeline was signed in 2010. 

He said that inflation had increased the pipeline’s estimated cost to $10 billon, up from the $7.6bn costing given in 2008. TAPI will transport between 60-90 million cubic metres a day (cm/d) of gas from Turkmenistan’s South Iolotan-Osman field in Turkmenistan through Afghanistan and Pakistan to India. 

Stroem said Turkmen Gas, Afghan Gas, Pakistan’s Inter State Gas System (ISGS), and India’s Gail were discussing sales-purchase agreements.  “They’re coming to a conclusion and there have been very positive responses by the four parties,” he added.  The ADB is the co-ordinator for TAPI and funded a feasibility study for the pipeline in 2004.

The Indian government, keen to increase gas’s share of the country’s energy mix, also welcomed the chance to import gas via pipeline.  “We will pursue gas wherever it exists in the world, through such projects such as the proposed TAPI pipeline project,” R P N Singh, Union Minister of State for Petroleum and Natural Gas, said.

The gas could also be delivered for $10/m Btu, according to consultancy McKinsey’s, which is cheaper than LNG, but more expensive than domestically produced gas.  

But despite the optimism, some delegates were sceptical because of the lack of security in Afghanistan and parts of Pakistan. Oil and gas infrastructure is often targeted by terrorist groups in the Middle East and Africa.

“TAPI has US backing over IPI (Iran-Pakistan-India) but it’s hard to see happening,” one diplomatic source told Petroleum Economist.  The source added that Afghanistan may use TAPI as leverage to get more funding to improve security, but it would not necessarily mean the pipeline would be adequately protected. 

Stroem agreed that security was the major challenge.  It would be in each country’s best interest to protect the pipeline to earn transit fees, but the relevant government may lack the resources.  He added that other major hurdles included attracting project sponsor and financing for the risky project.

Delegates also said the IPI project has been off the table since the Mumbai terror attacks in 2008 when Islamist gunmen from Pakistan killed over 100 people in the Indian city.  At the time of the attack, India was already under pressure not to go ahead with the IPI, with objections led by the US because of ongoing tensions with Iran. 

In 2008, India and the US also signed a nuclear energy deal to allow the Asian country access to technology and nuclear fuel for civilian use, sealing the fate of IPI.

The Myanmar-Bangladesh-India pipeline has also failed to materialise after Myanmar instead signed deal with China, leaving India with limited options in terms of pipeline gas imports.

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