India backs gas link across Afghanistan
By Syed Fazl-e-Haider
KARACHI - Proposals to build a US$7.6 billion natural gas pipeline, known as
TAPI, running from Turkmenistan through Afghanistan and Pakistan to India, have
been rejuvenated with New Delhi throwing weight behind the scheme.
The four countries at the weekend signed broad agreements to move forward with
the complex and high-risk plan to build the pipeline across rugged territory
plagued by war and terrorism.
The 1,680 kilometer TAPI gas pipeline, scheduled to be completed by 2013-14,
would bring 3.2 billion cubic feet of natural gas per day (bcfd) from
Turkmenistan's gas fields to Multan in Central Pakistan and end in Fazilka, an
Indian city near the India-Pakistan border.
The route would go through insurgency-wracked areas of
Afghanistan and Pakistan, but if it proceeds to completion the project is
expected to bring millions of dollars in transit fees for Afghanistan and
Kabul is confident that the pipeline will implemented, according to Afghan
Mines Minister Wahidullah Shahrani. "We will be earning a transit fee of
hundreds of millions of dollars each year that will create tremendous job
opportunities," he said.
At the same time, Asian Development Bank president Haruhiko Kuroda recognized
the difficulties that lie ahead. "This will not be an easy project to complete.
It is mandatory that we guarantee the security of the pipeline and the quality
of construction work," the Associated Press (AP) reported Kuroda as saying.
Though the TAPI project has won vocal support from the United States, analysts
believe it will be a challenge to secure financial backing and firm bids from
energy companies for a project so fraught with potential risks. At the same
time, its prospects may be brighter than those for a proposed Iran-Pakistan
(IP) pipeline project, which might also feed India. The US, which is seeking to
isolate Iran due to concern that it may be seeking to develop nuclear weapons,
has asked Islamabad to abandon this project and seek alternatives to meet its
severe energy shortage.
The presidents of Turkmenistan, Pakistan and Afghanistan on Saturday met for
the first time in the Turkmen capital, Ashgabat, to discuss the TAPI project.
India was represented by Energy Minister Murli Deora, filling in for Prime
Minister Manmohan Singh who was on a visit to Europe. They signed an agreement
under which the four nations committed to providing government support,
including security for the pipeline.
The contents of the document signed by Afghan President Hamid Karzai,
Turkmenistan President Gurbanguly Berdimuhamedow, Pakistani President Asif Ali
Zardari and Deora were not immediately made public. While a Gas Pipeline
Framework Agreement (GPFA) was signed, no deal was reached on future sales or
the consortium for the construction tender.
The project was initially designed to provide Turkmen gas to Pakistan through
volatile Afghanistan under an agreement signed in May 2002 in Islamabad. India
was invited to join in April 2008. The gas will come from the South
Yolotan-Osman and adjacent gas fields, after participating countries agreed in
August to switch from an earlier proposal that the gas come from Douletabad and
Last month, US deputy Assistant Secretary of State Susan Elliott, speaking at
an energy conference in Ashgabat, said the pipeline could boost stability
across the war-torn region.
In Afghanistan, the pipeline would run from western Herat, near the Iranian
border, through the southern Taliban heartland of Helmand and Kandahar,
presenting the authorities involved with daunting security and economic
challenges. While the cost of the project was previously estimated at $3.3
billion, it may run as high as $10 billion.
"Central to the agreement is the issue of security, with Turkmenistan
apparently not liable for any shortfall or disruption in supply, which would
infer that the onus is on each of the transit states to secure the pipeline,"
Reuters reported Goodbody Stockbrokers analyst Gerry Hennigan as saying.
The negotiations on TAPI project have been in progress for over 15 years.
Turkmenistan, with the world's fourth-largest proven reserves of gas, is eager
to find new markets, reducing its dependence on Russia, its traditional client.
Ashgabat has already increased gas supply to Iran and opened export routes to
China, whose President Hu Jintao late last year launched a 7,000 kilometer
pipeline to feed Turkmen gas to his country's burgeoning economy. Turkmenistan
is also ambitious to build a pipeline that would feed Western Europe.
Under the TAPI deal, Afghanistan's share would be 500 million cubic feet per
day (MMcfd), Pakistan 1,325 MMcfd and India 1,325 MMcfd. Turkmenistan would
pump in around 33 billion cubic meters of gas per annum. The 1,680 kilometer
pipeline includes 735 km across Afghanistan and 800 km through Pakistan, before
culminating in India.
Pakistan's federal cabinet approved the GPFA in October this year. The
country's demand for natural gas has increased by almost 10% over the past
decade, until by mid-2009 demand exceeded available supply, with production of
4,528 MMcfd against a demand for 4,731 MMcfd, indicating a shortfall of 203
Though Pakistani officials have hailed the agreement on TAPI, analysts say it
may just be more wishful thinking, as the proposed pipeline would have to pass
through not only Afghanistan - running alongside the Herat-Kandahar Highway -
but also through Pakistan's insurgency-hit Balochistan as it passes from
Chamman and Zhob on the way to Multan.
Pakistan in September proposed to Turkmenistan that it supply gas via Iran,
instead of laying a pipeline through war-torn Afghanistan. The proposed
alternative western route could reduce the length of gas pipeline to 1,490 km
from the 1,680 km of the Herat-Kandahar route.
Energy-deficient Pakistan wants quick implementation of the pipeline from
Turkmenistan, particularly after the possibility of building the Iran-Pakistan
link was reduced as a result of sanctions imposed by the United Nations and the
US on Iran's energy sector due to concerns over Iranís nuclear ambitions.
Even so, on May 28, Islamabad and Tehran signed a sovereign guarantee agreement
to start physical work on the IP pipeline, making effective a Gas Sales
Purchase Agreement (GSPA) signed by the countries last year in Istanbul. Under
the GSPA, Iran agreed to export 750 mmcfd with a provision to increase it to
one billion cubic feet a day (bcfd) at the rate equal to 78% of crude oil for
the next 25 years.
A senior diplomat attached to the Permanent Mission of India to the UN
reportedly said on Saturday that India had not abandoned the
Iran-Pakistan-India pipeline project and was seriously looking for courageous
insurance companies to underwrite the project.
"Apart from what we see is happening in the world today, we need Lloyds or
other major global insurance giants setting up a new division and undertaking
the risk so that we can start the project," the Associated Press of Pakistan
reported, citing an Indian television channel that quoted the diplomat.
India imports nearly 25% of its gas needs, which could rise to 50% by 2020
unless new domestic sources of energy are developed. It imports the bulk of gas
in the form of liquefied natural gas from Qatar and Algeria. With the prospect
of buying gas from Iran at present doubtful, India has been looking at options
from Myanmar, Central and West Asian countries and Russia.
(With additional reporting by Siddharth Srivastava in New Delhi.)
Syed Fazl-e-Haider (http://www.syedfazlehaider.com) is a
development analyst in Pakistan. He is the author of many books, including
The Economic Development of Balochistan (2004). He can be contacted at email@example.com.