The Turkmenistan- Afghanistan- Pakistan- India (TAPI) Project was originally conceived in the 1990s with a view to monetize Turkmenistan’s gas reserves through gas exports via Afghanistan to Pakistan and India. The project will serve to connect the resourceful gas fields of Turkmenistan to energy deficient power economies in the Indian subcontinent by providing steady supply of natural gas to these countries. The Project also has the potential to increase the regional co-operation between the participating countries and further promote security and political stability in the region.
In 2002, the governments of Turkmenistan, Afghanistan and Pakistan requested the Asian Development Bank (ADB) to become the Secretariat for a proposed Turkmenistan-Afghanistan-Pakistan (TAP) Natural Gas Pipeline Project. In March 2003, India was invited to join the Project. In its secretariat role, ADB has been assisting the government parties with the preparation of relevant studies in order to guide each government’s decision making process in further developing the project and establishing the project’s legal framework. In 2010 Inter-Governmental Agreement (IGA) was signed between heads of 4 member countries which established the legal corner stone of the project.
In 2013, the governments of Turkmenistan, Afghanistan, Pakistan and India respectively nominated Turkmengaz, Afghan Gas Enterprise (AGE), Interstate Gas Service (ISGS), and GAIL to promote, and invest in the Project. Additionally, ADB was appointed by the client as the Transaction Advisor (TA) to market the project and attract a suitable client to participate in the Project.
In accordance to the transaction advisor’s technical studies the total cost of the project was estimated USD10 billion with the transmission capacity of 32.8 billion cubic gas per year. The duration of the project is for 30 years and extendable.
Below are the key points about the project:
- TAPI Natural Gas Pipeline will deliver 33 billion Cubic Meter gas annually from Turkmenistan to Afghanistan, Pakistan and India.
- The length of TAPI Natural Gas Pipeline is 1814 km.
- Total construction cost of TAPI pipeline is estimated to be between USD 9.9 billion
- The total life of the project is expected to be 30 years.
- Afghanistan will receive annually approximately USD 400 million as a transit fee from TAPI project.
- The project will create thousands of new job opportunities.
Legal and Commercial Structure
The TAPI Project is owned by a special purpose consortium company called TAPI Pipeline Company Limited, which was established in November 2014 as TPCL in Isle Of Man - IOM. TPCL was established with each of the SGCs of Turkmenistan, Afghanistan, Pakistan, and India holding an equal (25%) share. Advised by ADB, the Project will select a Consortium Leader, who will be tasked with leading the design, construction, financing, and operation of the pipeline. The Consortium Leader will be selected from a pool of major national and international oil and gas companies based on designated criteria including, financial, technical, and operational strength, among others. Once selected, the Consortium Leader will take a substantial stake in TPCL. (“Project Company” or “SPV”). The final two-tier holding structure is envisioned as depicted in the figure below.
TAPI Gas Pipeline Project
The TAPI Project was originally conceived in the 1990s with a view to monetize Turkmenistan’s gas reserves through gas exports to Afghanistan and Pakistan, and, potentially to India.
In March 2003, India was invited to join the Project.
In 2010 Inter-Governmental Agreement (IGA) has been signed between signed between heads of 4 member countries which established the legal corner stone of the project
Introduction and Legal Structure of TPCL
The Project will be owned by a special purpose consortium company, which was established in November of 2014 as TPCL in IOM. TPCL was established with each of the SGCs of Turkmenistan, Afghanistan, Pakistan, and India holding an equal (25%) share. Advised by ADB, the Project will select a Consortium Leader, who will be tasked with leading the design, construction, financing, and operation of the pipeline. The Consortium Leader will be selected from a pool of major national and international oil and gas companies based on designated criteria including, financial, technical, and operational strength, among others. Once selected, the Consortium Leader will take a substantial stake in TPCL. (“Project Company” or “SPV”) The final two-tier holding structure is envisioned as depicted in Figure 1 below
The contract for the development of Front End Engineering & Design project documentation package and provision of services for the project management and technical supervision for the Afghanistan-Pakistan portion of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project was signed on 17 January 2017 between «TAPI Pipeline Company Limited» and «ILF Beratende Ingenieure GmbH».
The multi-billion US dollar TAPI
pipeline will transport natural gas from Turkmenistan to Afghanistan to Pakistan and to India. The 1,735-kilometer pipeline will run from the Dauletabad gas field in Turkmenistan to Afghanistan. Within Afghanistan TAPI will be constructed alongside the highway running south to Herat and then to Kandahar and onto Quetta and Multan in Pakistan. The final destination of the multi-nation pipeline will be the Indian town of Fazilka, in the Punjab near the Pakistan-India border.
The pipeline will be designed to carry 33 billion cubic meters (bcm) of Turkmen gas annually, and both Pakistan and India through state-owned companies would each purchase 42 % of that volume (13.8 bcm). Meanwhile, Afghanistan would purchase 16 % of that gas which would amount to 5.11 bcm. In addition, Afghanistan will be entitled to receive a transit fee for the use of its territory from each of the other TAPI buyers.
The pipeline is expected to be 1,420 millimeters (56 inches) in diameter and will have a working pressure of 100 standard atmospheres (10,000 kPa). The initial annual capacity will be 27 billion cubic meters (bcm) of natural gas. Thereafter the capacity will be increased to 33 bcm.
The pipeline would run for nearly 1,735 kilometers , including 735 kilometers across Afghanistan and another 800 kilometers through Pakistan. Compressor stations would be constructed at different points of the pipeline.
The key to the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project is of course the pricing, which has to be competitive with alternative sources of energy.
TAPI member countries have regularly held multilateral and bilateral meetings, including recently in Turkmenistan, to address various commercial, operational and technical issues. Final agreement is expected in the not too distant future.
The four countries signed the TAPI gas pipeline deal in September 2010, raising hopes of having a energy rich tomorrow. The TAPI pipeline project has moved forward since then. In January 2011 India’s External Affairs Minister S.M. Krishna discussed with the Afghan leadership the role Afghanistan can play as a major energy trade and transit hub, and the possibilities of transforming the war ravaged country into a pivotal and significant energy bridge between Central and South Asia.
The trans-Afghanistan pipeline, as pointed out by experts, is an economically viable project. The Asian Development Bank (ADB) carried out a feasibility study of the proposed project and TAPI has the Bank’s support. The EU and US also provide international support for the TAPI pipeline project. The goal is for the pipeline to be operational by 2016.
TAPI will serve as a source of power and energy for industries, which could use its gas as their power supply. Establishing gas based medium capacity power plants and gas-consuming industries will be productive and useful investment. Such power plants and grids will provide solid investment opportunities for domestic and international manufacturers and provide small industries the chance to grow and create needed jobs.
Moreover, TAPI as a large pipeline construction project will create significant windows of opportunities for companies to participate in the construction of the pipeline and offer employment opportunities for many