The 1,680 km pipeline to become operational by 2018
In a step that is likely to boost peace and give new shape to regional energy cooperation, India, Pakistan, Afghanistan and Turkmenistan, on Wednesday, inked the historic gas sale purchase agreement (GSPA) for the $7.6-billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, often touted as the peace pipeline.
Turkmenistan, which holds more than 4 per cent of the world's natural gas reserves, signed agreements to sell gas to India and Pakistan through the 1,680 km pipeline at the Caspian Sea resort of Avaza in Turkmenistan, according to a statement issued here. For India, the agreement was signed by GAIL (India) Chairman B. C. Tirpathi in the presence of Petroleum and Natural Gas Minister Jaipal Reddy who described the signing of the GSPA as “no ordinary event” and a triumph of multilateralism, regional cooperation and economic integration.
The TAPI pipeline will have a capacity to carry 90 million metric standard cubic metres a day (mmscmd) of gas for a 30-year period and is likely to become operational by 2018. India and Pakistan would get 38 mmscmd each, while the remaining 14 mmscmd will be supplied to Afghanistan.
Besides Mr. Reddy, the GSPA, signed by national oil companies of the four nations, was witnessed by Turkmenistan Oil Minister, B. Nedirov, Pakistan's Petroleum Minister Asim Hussain and Afghanistan's Minister of Mines Wahidullah Shahrani.
“Without a doubt, the economic benefits of the TAPI gas pipeline will be immense for our energy-starved economies. The flow of natural gas will bring in industrial and economic development in our countries,” Mr. Reddy said.
“It is our belief that the TAPI gas pipeline will transform the politics of this region.” Hopefully, the spin-off benefits of this pipeline will encourage us to emphasise trade and investment issues over contentious political issues and enable us to build trust and confidence among ourselves as neighbours and partners in progress,” he said.
Last week, the Union Cabinet gave its nod to the signing of GSPA and also approved the payment of 50 cents per million metric British thermal unit (mmBtu) as the transit fee to Pakistan and Afghanistan for the gas.
The contract price of TAPI gas is linked to a formula which contains indices based on fuel basket and other indices which are not as volatile as crude oil. The formula is similar to the ones used in international contracts. The U.S. is backing the pipeline as an alternative to the India-Pakistan-Iran (IPI) pipeline that has been stalled for quite some time now due to U.S. pressure on India and Pakistan not to go ahead with the project. The pipeline will run from the Turkmenistan gas fields to Afghanistan. It will start from the Dauletabad gas fields and run into Afghanistan alongside the highway running from Heart to Kandahar and then via Quetta and Multan in Pakistan. The final destination of the pipeline will be Fazilka near the India-Pakistan border.
Keywords: TAPI gas pipeline, GSPA, GAIL India
Although there are apprehensions that the TAPI Gas conduit will be a disaster, India should nonetheless throw in its lot with the consortium. I know it's a gamble but with US Military pre-eminence India can be at peace for the next 20 years. A friendly government in Afghanistan and a much mellowed Pakistani establishment is a reality, given the US long-term geopolitical strategy in the region. Economics after all has the power to alter behavior, and the pipeline will bring peace and who knows once Iran falls in line and becomes a responsible member of the global community, a consortium of European energy companies with US coaxing again mid-wife and revive the IPI. Let Baluchistan become the hub of energy pipelines with a US Naval base in Gwadhar as a guarantor of Pakistani behaviour and gas will flow from both the North ( Dauletabad Field ) & West ( South Pars Field ). We need to keep our energy sources diversified and not depend heavy on a single or few sources, be it the undersea Oman pipeline, TAPI or IPI. Take it as it comes and go with the flow. Pakistan gets its transit fee and share of gas , afganistan gets its transit fee , Iran & Turmenistan get revenue and long-term markets for their gas. Western oil companies, banks get to make money by helping to finance and transfer technology for the projects. Every player is a winner, some more some less ................nonetheless all winners.
The problem with the indices,is that they can be manipulated by
speculators, misusing the dreaded Derivatives.The buyer will always be
held to ransom by the Speculators!
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