Monday, June 27, 2011

TAPI gas project hits snags as buyers seek uniform price

ISLAMABAD - The much-delayed Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project has hit new snags as buyer countries Pakistan, Afghanistan and India sought uniform price of gas while Turkmenistan wants a bilateral arrangement (separate prices) for every buyer country, senior officials at the Ministry of Petroleum and Natural Resources told The International News.

Under the proposed project, the 1,640-km. TAPI gas pipeline backed by the Asian Development Bank will 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 the northwestern Indian town of Fazilka. Out of this, Pakistan will get 1.365 billion cubic feet of gas per day, India 1.365 bfcd and Afghanistan 0.5 bfcgd.

Sources say the Manila-based ADB is willing to sponsor Pakistan's equity in the TAPI project. The official said Pakistan, which is virtually a cash-starved country, needs a huge injection of gas to meet its growing energy needs and to this effect the ADB's offer to sponsor the major chunk of Pakistan's equity in the project will provide massive ease to the country. Sources privy to the Manila talks said stalemate plagued talks in Manila from May 30 to June 3 between the seller and buyer countries when Afghanistan, Pakistan and India united on the stance that a separate tariff would have huge political repercussions in each buyer country.

Sources said buyer countries also raised the issue of which countries would pay the price of lane-packed gas (gas which remains in the pipeline). Turkmenistan is of the view that buyer countries always pay for lane-packed gas but buyer countries want the seller to share the price of the lane-packed gas. "Buyer countries argue that since they will have take off of gas from their respective border points, why should they pay for gas which remains in the pipeline," said a source.

When asked when the Gas Sales Purchase Agreement (GSPA) would be signed by seller and buyer countries, sources said it would be finalized by July 31, 2011.

During the Manila talks, India brought up the issue of sulphur content in the gas saying India had comprehensive legislation in this regard and wants minimum sulphur content in the gas imported from Turkmenistan. Sources said Afghanistan and Pakistan also sided with India on the issue and Islamabad demanded that sulphur content be no more than 0.25 percent. On this issue Turkmenistan said it would have to build a de-sulphurisation plant, which would increase prices for all buyer countries.

"During the talks many technical issues got resolved, but 15 to 16 issues are still to be resolved," official sources told The International News. "All stakeholder countries have decided that the project will be completed not in the segmented approach adopted in the case of the Iran-Pakistan gas pipeline but using the integrated approach."

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