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April 21, 2012

Gas transit fee finalised at 49.5 cents per MMBTU

 
April 21, 2012

ISLAMABAD: In a landmark development Friday afternoon, the three gas buying stakeholders invested in the TAPI pipeline project ñ Afghanistan, Pakistan and India ñ signed the transit fee deal at 49.5 percent per MMBTU for gas being imported from Turkmenistan under the $7.6 billion mega project, Federal Minister for Petroleum and Natural Resources Dr Asim Hussain told the News.†

Speaking to reporters after the meeting, Dr Asim confirmed, “India will pay 49.5 cents per MMBTU as transit fee each to Afghanistan and Pakistan. And Pakistan will pay the same to Afghanistan only. India has already signed the gas sales purchase agreement with Turkmenistan, and Afghanistan is to sign the gas price deal with the seller country [soon].” The minister also added, “Pakistan is due to get $217 million in transit fees from India which will be paid to Afghanistan.”

The pipeline is likely to bring gas to Pakistan by December 2016, depending on a credible security apparatus in Afghanistan. Under the proposed project, the 1,640km long TAPI gas pipeline will bring an estimated 3.2 billion cubic feet of natural gas per day (bcfd) from Turkmenistan’s gas fields to Multan in central Pakistan and will end in the northwest Indian town of Fazilka. Out of this amount, Pakistan is set to receive approximately 1.365 billion cubic feet of gas per day, India 1.365 bcfd and Afghanistan 0.5 bcfd.

A relevant official explained that Afghanistan has declined gas intake from Turkmenistan under the TAPI project arguing it has no infrastructure and gas network to absorb the gas and thus cannot afford to have its share of gas. Kabul is only interested in its share of the transit fee. “If Kabul sticks to its stance then its share will be equally divided between Pakistan and India,” the source confided to The News.

Representatives of Pakistan, India and Afghanistan, the minister said, are due to assemble in Turkmenistan on May 24 for the upcountry development and

are likely to negotiate to develop their stakes in the development of the gas field; to this effect a steering committee comprising representatives of all the four countries as well as the Asian Development Bank is expected to carve out a workable strategy.†

Another senior official at the Ministry for Petroleum and Natural Resources told The News that Pakistan and Turkmenistan are also due to sign the gas sales purchase agreement under which the cost of Turkmen gas at the Afghan border would be at 55 percent of the crude oil parity price; at mid country (Multan) it is expected to be 70 percent of the crude oil parity. In comparison, gas imported from Iran under the IP project is predicted to reach Multan at about 80-81 percent of the crude oil parity.†

According to the petroleum minister, once the gas price deal is inked with Turkmenistan, Pakistan will be in a better position to initiate talks with Iran to decrease the gas price under the IP gas line project as the price review clause in the GSPA with Iran will automatically have opened.†

Dr Asim also assessed that Pakistan would get the benefit of $1 billion every year while importing gas from Turkmenistan if compared with import of gas from Iran. However, a senior official while speaking to The News did not agree with his minister, explaining that both projects were different and had their own unique dynamics. The minister was unable, however, to disclose the price of gas being purchased from Turkmenistan, saying that making it public may prove detrimental, and that if nation wanted him to disclose the price, it should be prepared to pay the market price of gas. †

Commenting upon the pace of work on the IP gas project, the minister said that Pakistan was vigorously working to maintain the trajectory of the development, referring to Prime Minister Syed Yusuf Raza Gilaniís recent statement about the project. The design work is underway and closed to being completed, the minister maintained before adding that the government was ready to enter into the second phase of the project and select an EPC (Engineering, Procurement & Construction) contractor next week.



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