New Delhi: A gas pipeline project from Turkmenistan to India through Afghanistan and Pakistan, known as TAPI, has hit the skids, with the potential anchor investors making their participation conditional to energy-rich Turkmenistan offering them stakes in its hydrocarbon fields.
Turkmenistan does not allow such ownership rights and only offers service contracts and is unrelenting on the issue. The anchor investors were to share the risks involved in the project. The national oil companies of India and Pakistan are unwilling to bear the $9 billion (around Rs.47,520 crore today) risk for the 1,680km pipeline project.
Another meeting of the steering committee is expected in Turkmenistan in November to break the impasse.
“Potential investors in TAPI, such as global oil majors Exxon Mobil and Chevron, are unwilling to participate in the project after the Turkmenistan government’s insistence on not allowing any investments in Turkmenistan’s hydrocarbon blocks. Turkmenistan is willing to only grant service contracts to the potential investors in the pipeline,” an official of India’s oil ministry said, requesting anonymity. “National oil and gas companies of the participating countries are also averse to making investments due to financial and managerial constraints.”
Kakageldy Abdullaev, Turkmenistan’s acting minister of oil and gas industry and mineral resources, said on Monday there was “substantial interest” from institutional investors in the project.
Turkmenistan has signed a gas sale and purchase agreement with Pakistan and India. The construction of the pipeline was expected to start in 2012 and the project was to be commissioned by 2016. As per the revised schedule, the consortium of companies to build the pipeline is to be finalized by 2014, and gas delivery is expected to begin by 2017.
“Tukemenistan’s leaders are unyielding. This is the problem. Global majors are not willing to construct only for a construction and service contract. You take the rough with the smooth. We are optimistic,” said another Indian government functionary, who didn’t want to be identified.
The pipeline has been delayed already because of political and economic issues. The main issue was security as the pipeline passes through Afghanistan and Balochistan in Pakistan, both considered to be unstable areas where the project may face the risk of sabotage. India joined the project in April 2008.
The Asian Development Bank is the lead partner in the pipeline project, also dubbed as the peace pipeline for bringing together nations that share complex and difficult relationships. The pipeline is expected to have a capacity for carrying 90 million standard cubic metres per day (mscmd) of gas from Turkmenistan’s Gunorta Yoloten-Osman fields. Of this, 38 mscmd is planned for India.
“Construction of the pipeline is the main factor left for the progress of the pipeline,” Abdullaev admitted on Tuesday.