New Delhi: The Union cabinet on Thursday approved the ambitious $7.6 billion (around Rs 41,270 crore today) gas pipeline project that originates from Turkmenistan and passes through Afghanistan and Pakistan before terminating in India.
Often referred to as the “peace pipeline” because some of the countries that it passes through have an adversarial relationship, the deal involving the four countries is expected to be inked by the end of the month.
Not only will the investment address India’s urgent need to boost gas supplies, it will also help underline its growing economic linkages with Afghanistan, and more recently with Pakistan. It could, however, potentially cause some diplomatic friction with Iran as India has abandoned a similarly ambitious project with that country and opted instead for a Central Asia project that has been backed by the US.
“This is India preparing for the future. It signals that we are there to take advantage of the energy resources of Central Asia,” said Kanwal Sibal, a former foreign secretary. “So far, Turkmenistan has been selling gas to China. This shows that they would like to diversify their customer base and include us as well. It also signals that we are looking at Afghanistan in the long term.”
A person familiar with the development concurred, “The success of the pipeline could, in the long term, make a case for Pakistan to look at India differently and engage with India economically, giving them greater stakes in the peace in the region,” he said.
Pakistani diplomats declined to make any immediate comment.
C. Uday Bhaskar, an analyst with South Asia Monitor, a Delhi-based think tank, said, “This is the first major success from Central Asia. It will be a major addition to India’s energy basket.”
The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project is expected to be about 1,680km in length. Of this, 144km will be in Turkmenistan, 735km in Afghanistan, and 800km in Pakistan, bringing it to the India border. Of the 90 million standard cubic metres per day (mscmd) of gas that will be pumped through it, India and Pakistan will get 38 mscmd each and Afghanistan the remaining 14 mscmd.
The pipeline is expected to be operational in 2018 and supply gas over a 30-year period. According to an industry expert, the landed cost of gas transported through the TAPI pipeline in India is expected to be around $10 per million British thermal units after transit fees are paid to Pakistan.
Currently, India requires 176 mscmd of gas, of which a little more than one-sixth is imported. By 2020, the country might need about 400 mscmd, according to industry estimates.
The oil ministry had said in October that by 2016-17 alone, demand could go up to 473 mscmd and cross the 600 mscmd mark by 2021-22. Out of this, 210 mscmd is likely to be produced locally and the remainder may have to be imported, according to oil ministry estimates.
The source of the gas to be routed through the TAPI pipeline is the South Yoloten Osman field, recently renamed Galkynysh, which has been certified by a reputed international consultant to be holding proven recoverable gas reserves of 16 trillion cubic metres, according to a government release.
Both Afghanistan and Pakistan have made commitments regarding the safety and security of the pipeline through the Inter-Governmental Agreement and the Gas Purchase Framework Agreement signed among the four countries in December 2010.
The pipeline, proposed in the early 1990s, has been delayed by political and economic hurdles. The main issue has been security because it 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 project that’s expected to involve an investment of $7.6 billion.
Some experts were sceptical about the project.
“It is doubtful whether the TAPI project will eventually take off. Turkmenistan has committed most of its energy resources to other countries, including China, so there is every likelihood that the eventual supply will be much lower than what is being promised now,” said Lydia Powell, an energy analyst with New Delhi-based Observer Research Foundation.
The other pipeline project India has been involved with has been delayed over price and transportation fees that India would have to pay Pakistan. Talks on the 2,300km Iran-Pakistan-India (IPI) pipeline started in 1995, but with India clinching the civilian nuclear agreement with the US, the process slowed.
Iran and Pakistan decided to go ahead with the project without India, and have even extended a partnership offer to China. The last trilateral meeting on the IPI pipeline involving Iran, Pakistan and India was held in July 2007.
Admitting that TAPI would isolate Iran, Sibal said, “The United States has been pushing this deal.”
However, the government refuted this argument.
“This does not mean that we are ignoring our ties with Iran, a country we need for our energy security. TAPI was the project we have been negotiating for long. We are continuing our negotiations and engagement with Iran for bettering our relations,” said E. Ahamed, minister of state for external affairs.
Maulik Pathak in Ahmedabad contributed to this story.