Energy

Turkmenistan shores up gas investment as TAPI construction continues

By Dzhumaguly Annayev

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Construction materials for the TAPI gas pipeline can be seen in this photo taken in Yoloten District, Mary Province, in May 2016. [File]

ASHGABAT -- Turkmenistan is stepping up efforts to develop its gas and energy industry, as work on the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline continues.

If the pipeline ever begins operation, Turkmenistan will have a vast South Asian market, helping free it from its dependence on Gazprom. The Russian gas monopoly buys Turkmen gas at insultingly low prices, taking advantage of Turkmenistan's lack of alternative customers besides China.

The project also holds out the prospect of jobs and lucrative gas transit fees for war-torn Afghanistan and plentiful gas for Pakistan and India, both of which have scant hydrocarbon reserves.

Turkmenistan is organising the "TAPI - The Gas Pipeline for Peace and Co-operation" international conference and forum Monday-Tuesday (February 24–25) in Dubai, the Turkmenistan State News Agency reported February 20.

Officials from Ashgabat, as well as representatives of international oil and gas companies, financial institutions, scientific and research institutions and other international organisations, will take part in the event.

A roundtable including representatives of foreign companies will discuss the development of the gas and petrochemical industry in Turkmenistan and investment in Turkmenistan's offshore blocks in the Caspian Sea.

Along with the conference, an international forum to court foreign investors to the Turkmen oil and gas industry will occur, Trend reported February 21, citing Turkmen Deputy Prime Minister Myratgeldi Meredov at an earlier cabinet meeting.

The construction of the TAPI pipeline is part of Turkmenistan's energy strategy, which aims to diversify export routes for energy supplies to the global market, emphasised Turkmen President Gurbanguly Berdymukhamedov, who attended the cabinet meeting.

The implementation of such a large-scale project will give a new impetus to the economic development of the region's states and will contribute to solving social, environmental and humanitarian challenges, he said.

Pipeline for peace and co-operation

The construction of the Turkmen section of the TAPI pipeline began in December 2015.

The pipeline's capacity could reach reach 33 billion cubic metres of gas per year. It is expected to run through the Afghan cities of Herat and Kandahar, the Pakistani cities of Quetta and Multan and the Indian city of Fazilka.

The construction of the Afghan section of the pipeline started in February 2018, while the construction of the Pakistani section is set to begin in 2020.

Since the beginning of this year, construction of the TAPI pipeline has come up for discussion at Turkmen cabinet sessions and international meetings more than 10 times.

On January 17, Berdymukhamedov directed members of the cabinet to accelerate work on the Turkmen section of the pipeline, seek new investors and engage in dialogue with foreign partners on this project, according to the Turkmenistan State News Agency.

On February 1, a Turkmen delegation led by Foreign Minister Rashid Meredov held several meetings in Kabul and New Delhi during which the TAPI pipeline was among the main topics, according to CentralAsia.news.

Risks and problems

Though work is continuing, several factors could hold back the implementation of the TAPI project, according to Vladimir, an Ashgabat-based economic media observer who asked not to be identified by his surname.

"It is difficult to say which of these problems is the main one and which is secondary. All of them are in their own way important to resolve," he said.

A 774km length of the gas pipeline is expected to go through five Afghan provinces, making security and stability in Afghanistan a concern.

"Despite Afghan authorities' formation of a detachment of 700 soldiers to protect the gas pipeline facilities, the risk of sabotage remains high. From this problem arises the issue of funding the construction," said Vladimir.

The project's total cost, according to various estimates, is $10 billion to $12 billion (35.1 billion to 42.1 billion TMT), he said. Financial institutions such as the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB) and others have previously announced their intention to help finance construction, but so far the only concrete investment has been Saudi loans.

Non-members of the consortium have their own objections. Iran wants to export its own gas and has attempted to sabotage construction of the pipeline, as captured Taliban members confessed in Herat Province, Afghanistan, in 2018.

China wants to buy all the gas from the Galkynysh field in Mary Province rather than share it with other customers, she added.

"As for Turkmenistan, it will certainly build its own section of the gas pipeline and fulfill its contractual obligations," Akmuradova said.

'Enough gas for everyone'

Turkmenistan has the world's fourth largest natural gas reserves and is doing everything it can to expand its sales markets.

Turkmengaz is convinced that the reserves will allow Turkmenistan to fulfill all obligations in regards to existing contracts and gas pipelines, as well as for new promising destinations in markets of Europe and South Asia.

"There is a lot of gas. There will be enough for everyone," said Rovshen Khallyyev, chief specialist for Marygazdobycha, the division of Turkmengaz that extracts natural gas in Mary Province.

At present, Turkmen gas flows eastward to China and northward to Russia, in the amounts of 35 billion and 5.5 billion cubic metres per year, respectively, he said.

"A total of 33 billion cubic metres of gas [per year] are planned to go to the south through TAPI -- 14 billion cubic metres each to Pakistan and India and 5 billion to Afghanistan," said Khallyyev.

"You can't achieve anything without trying," said Khallyyev regarding the difficulties in building the pipeline.

"The deadlines for commissioning TAPI will be pushed back, but the project ... will still be implemented," said Khallyyev.

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