A Gas Pipeline Framework Agreement (GSFA) was signed to facilitate joining of India in Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline, turning it into a 4-nation project here on Thursday. Indian Oil Minister Murli Deora formally made a request at the steering committee meeting held here to permit India to join TAP, which was accepted by the parties to the project.
Later on, addressing a joint press conference with the visiting oil ministers of other three countries, Khawaja Asif categorically denied that talks on Tapi were held in Islamabad on the US pressure to block Iran-Pakistan-India (IPI) project.
He said India and Pakistan will commence bilateral talks on IPI on April 25, adding that Turkmenistan will provide third party certification in the next steering committee meeting to be held in New Delhi sometimes in September or October this year. He said Tapi was economically and commercially viable project even at an escalated cost of $7 billion.
He said the steering committee agreed to a schedule to complete pipeline work by 2010 and start of gas import from 2013. He said the pipeline would import 3.2 BCF gas from Turkmenistan which India and Pakistan will purchase on equal basis. He said that prices and other technical issues would be sorted out once initial work for the project is completed on fast track basis. India's Oil Minister Murli Deora told a questioner that New Delhi was more than serious to become a party to Tapi. He said India was also committed to remaining an interested party and he would participate with open mind and heart in talks for IPI scheduled for April 25.
The steering committee meeting on Tapi was held here from April 21-24. Petroleum Minister Khawaja Asif, Baymurad Hojamuhamedov, M. Ibrahim Adel, and Murli Deora, represented Pakistan, Turkmenistan, Afghanistan and India in the meeting respectively.
Prior to steering committee meeting, technical level discussions were held from April 21-22. Asian Development Bank (ADB) Country Director Peter Fedon facilitated the talks. He also responded to newsmen queries and said that Tapi was a project of friendship and the Asian Bank was very much involved in making its project a reality.
Turkmenistan side assured confirmation of adequate reserves of gas in Turkmenistan to support the combined demand of the buyer countries for 30 years. Afghanistan, India, and Pakistan confirmed demand for natural gas to be imported through Tapi. The meeting also discussed gas pricing.
The participants also discussed sale and purchase of gas, besides considering an updated feasibility 2004, carried out by the ADB, reflecting the project cost and techno-economic viability.
A handout issued at the briefing said the original study proposed a 1,680-km 56-inch diameter pipeline starting from Dauletabad field in Turkmenistan to Fazilka at the Pakistan-India border, passing through Herat and Kandhar in Afghanistan and Multan in Pakistan.
The project cost estimated then was $3.3 billion (in 2004 prices) which has now been updated to $7.6 billion (in 2008 prices). It said that the price increase was due to (i) sharp increase in price of steel; (ii) increase in construction cost, and (iii) increase in the cost of compressor stations. It maintained that despite a significant increase in cost estimates, the project was still considered as economically and financially viable.
GAS RESERVES AND AVAILABILITY CONFIRMATION DISCUSSIONS: Turkmen Minister Baymurad Hojamuhamedov informed the steering committee that huge new gas reserves had been found in Turkmenistan, which had been extensively reported in the world press.
He said Turkmen government was awarding the contract for certification of reserves of various gas fields to a British consultant by the end of this month and their report will be available in about five months.
He, however, said the Turkmen scientists determined that total gas reserves were eight trillion cubic meters (TCM) which would leave the Turkmen government with huge surplus reserves after meeting the demand of the Tapi buyers.
The Turkmenistan party also agreed to provide all parties with technical specifications of gas supply for the project at an early date.
GAS DEMAND AND OFF-TAKE VOLUMES DISCUSSION: The Project will supply 3.2 BCF gas. Demand presentations from Afghanistan, Pakistan and India were made to the steering committee. Afghanistan proposed to offtake up to eight million cubic meters per day in years 1 and 2, and up to 14 million mmcfd the 90 mmcmd allocated to the project starting from the year. Pakistan and India agreed, in principle, to equally share the remaining volume between them.
GAS PRICING MECHANISM: Turkmenistan's proposal for the gas pricing formula and a joint counter-proposal from the buyers made by India was discussed at this meeting. The parties have agreed to formulate a long-term pricing mechanism which will be attractive to the buyers as well as the seller and will reflect the new market trends as well as the long-term commitment of the parties to this project.
REVISION OF THE GAS PIPELINE FRAMEWORK AGREEMENT TO FORMALIZE INDIA'S PARTICIPATION IN THE PROJECT: The TWG and the steering committee reviewed the revised gas pipeline framework agreement and endorsed the draft for signing by each government, thereby resulting in the joining of India in the project as a full member.
NEXT STEPS AND ACTION PLAN: The parties agreed to continue further discussions on the development and implementation of the project with renewed vigour on various matters under the following agreed action plan:
Turkmenistan side assured the meeting that audit report on certification of gas reserves will be available latest by September 30, 2008. Turkmenistan also agreed to supply the gas specification in one month. The parties agreed that the TWO may prepare a draft of the GSPA and the next meeting of the TWO may be held in New Delhi at an early date.
REVIEW OF THE FEASIBILITY STUDY: The ADB agreed to take up the issue of a comprehensive review of the feasibility study in order to move forward to the next phase of inviting investors' interest in the project.
FORMATION OF A CONSORTIUM: The parties have agreed to form a consortium of investors to undertake the detailed feasibility study and further actions.