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Thursday, 17 September 2015 18:00

Turkmenistan preparing alternative for export of Caspian gas to EU Featured

Turkmenistan, by combining the eastern fields and the Caspian coast into a single gas pipeline network (East-West gas pipeline to be commissioned this year), is getting ready for opening one more export direction. Early in December 2015 Turkmenistan will start constructing Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. The source in the government told Reuters about it.

Ashgabat interstate agreement signed by the participants in 2010 and implied the implementation of the project is a basic document for TAPI.

This project has a long history. As early as 90s the American company Unocal was about to implement it, but facing the security problems in Afghanistan and tension in the relations of India and Pakistan, it had to postpone the project.

Nowadays, the interest of Asian consumers in direct pipeline supplies has been increased. According to the plan, the pipeline will be laid along the unpopulated mountain area and will be secured by unmanned air vehicles. The project capacity of TAPI will reach up to 33 bcm of gas per year.

The gas pipeline will rise from Turkmenistan’s largest gas field Osman – South Iolotan. The estimate cost of the project will total up to $10 bln.

Earlier in mid of August, the head of the ADB Venzay Zhan stated in his meeting with Turkmen President Gurbanguly Berdimuhammedov that the bank would become a project consultant and intends to lend a technical and financial support to big investment projects, including TAPI.

The British company Penspen has prepared the feasibility study of the project by the order of ADB.

The consortium TAPI Limited will lay a pipeline from the south-eastern regions of Turkmenistan where large gas fields are located. The pipeline will cross Afghanistan and Pakistan right up to the dwelling settlement Fazilka (India) on the Pakistani-Indian border.

Turkmengas state concern has been elected a leader of the TAPI Limited consortium – the largest producer of natural gas in Central Asia.

It is assumed that other core business will join the group of the consortium leader at following stages of the project implementation, the government of Turkmenistan stated.

Turkmenistan is already exporting gas to China (about 35bcm this year and 4 bcm to Russia in 2015). Gas production of Turkmenistan is expected to total 48 bcm this year.

Turkmen gas will help to meet the increasing demand for gas in India and Pakistan where the demand can increase twice as much by 2030.

Apart from this, it will lower a permanent deficiency of energy resources in transit Afghanistan.

“Bangladesh has also expressed its interest in the project. After implementing the TAPI project India will receive its first trans-national gas pipeline. The country is currently purchasing has in liquefied condition and transporting it by tankers” – the state website of the government of Turkmenistan noted in August.

India at present is considered one of the most perspective power-hungry markets. India is currently importing up to 75% of energy it needs and aspiring to diversify supplies of energy resources. In particular, India shows interest in import of LNG from Iran and Russia.

The demand for gas in India will grow almost by one third in 2018-2019 – by 29%, the State Minister of Petroleum And Gas Dharmendra Pradhan (independent charge) said. The written reply of the minister to the inquiry from the upper chamber of the Indian parliament says that the working group for petroleum and natural gas predicts the increase of demand from 405 mln standard cubic feet (11.47 mln cubic meters) per day in 2014-2015 up to 523 mln standard cubic feet (14.81 mln cubic meters) per day in 2018-2019.

By 2030 India will have become the second largest gas consumer in the Asian Pacific Region after China. Both countries are facing environmental problems because of broad-scale use of coal (50% of energy demand of India and two third of demand in China are met by coal). Therefore, the share of consumption of gas, which is more ecological than coal, will grow in the energy balance of these countries. 

In view of features of the Indian market, gas to its major consumers (energy and chemical industry), which account for over 60% of consumed gas, is supplied for understated prices (subsidized by the state) from local fields. Therefore, the price issue will be the major one on the agenda just like in case with the Chinese supplies. In this case the future of the project will depend on the motivation of countries-consumers to create a favorable price corridor for export of Turkmen gas. Even if problems find their solution anyway (which is less probable) and lead to the implementation of TAPI, the Caspian producers will get a new opportunity to export gas to the south Asian countries as an alternative for the European direction (across the Trans-Caspian gas pipeline). 

Please see the material in more detail in the following issue of Caspian Energy Investor (spread in over 50 countries)

Natalya Aliyeva

President and Editor-in-Chief of Caspian Energy International Media Group

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