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.

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