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December 16, 2019

TAPI gas line: Turkmenistan to provide insurance for gas passing through Afghanistan


December 16, 2019

ISLAMABAD: With a view to accommodating demand of Pakistan, Turkmenistan will, under multi-billion dollars TAPI gas line project, provide insurance of the volume of gas to be travelled through Afghanistan. In case of gas transit loss because of any subversive activity in Afghanistan, the damage will be paid through insurance cover. Turkeminstan has found this solution when Pakistan refused to pay any kind of compensation if the gas transit loss occurs on way to Pakistan border from Turkeminstan border through territory of Afghanistan because of militancy.

The top man of the Petroleum Division told The News that under latest scenario, a delegation from Turkmenistan would arrive in Pakistan by almost mid of January 2020 and will brief Pakistani’s officials not only on mechanism to cope with gas risk in Afghanistan but would also on a clause that will ensure the arrival of gas on Pakistan border and then Turkeminstan will qualify for payments from Pakistan. The delegation would also review the gas prices earlier done as per Gas Sales Purchase Agreement under TAPI line project. Pakistan now wants changes in formula for gas prices. Afghanistan will be having the gas under TAPI 500mmcfd, Pakistan 1.325bcfd and India 1.325bcfd too.

Turkmen Gas Company being the consortium leader for the TAPI Project is to contribute up to 85 percent of equity, and the rest of TAPI members namely Afghanistan, Pakistan and India would take 5 percent each equity share in the project company.

Earlier, Pakistan was bound, the official said, to invoke its monetary liabilities on the arrival of gas under TAPI project at Turkeminstan - Afghanistan border, but Special Assistant to Prime Minister Nadeem Babar took the cognizance of the flawed agreement and demanded that Pakistan’s liabilities will be invoked only when the gas under TAPI pipeline will arrive at Pakistan-Afghanistan border and more importantly Pakistan will not be responsible for any gas transit loss done in the territory of Afghanistan.

Now Turkmenistan has bowed down to the demand of Nadeem Babar and promised saying that it would enter a new clause in the agreement under which no damage will be passed on to Pakistan in case of gas transit loss in territory of Afghanistan. The authorities concerned of Turkmen Gas Company have communicated this to their counterpart in Petroleum Division at top level saying that the volume of gas to be travelled in the territory of Afghanistan will be insured by world top companies and in case of any gas loss, the issuance companies will bear the loss. According to top official, Pakistan deems that the gas price formula under which the gas prices of every buying country (Afghanistan, Pakistan and India) worked out is too much complicated and the new gas price formula need to be worked out. To a question, he said that Pakistan wants the reference price of LNG currently cheaper in the open market as alternative of TAPI gas while starting the price review talks.

“So we want Turkmenistan to review gas price formula prior to much-awaited ground breaking of laying down the portion of TAPI pipeline in the territory of Pakistan, the official said.

The three buyer countries — Afghanistan, Pakistan and India had inked the gas sales purchase agreement with Turkmenistan on bilateral basis. Now all the buyer countries want to unfold their prices and want re-negotiations.

The project will be operational by 2020. The pipeline from Afghanistan that will enter from Chaman and pass through Zhob, DI Khan, Quetta, Multan and touch upon the Fazilka — a city at Indian border which is 150 kilometers away from Multan. From Fazilka, the pipeline will enter India.

TAPI gas pipeline project aims to bring natural gas from the Gylkynish and adjacent gas fields in Turkmenistan to Afghanistan, Pakistan and India. The ADB is acting as the facilitator and coordinator for the project. It is proposed to lay a 56-inch diameter 1,680km pipeline with design capacity of 3.2 billion cubic feet of natural gas per annum (Bcfd) from Turkmenistan through Afghanistan and Pakistan up to Pak-India border. There are two phases of this project, the first phase is free flow phase with estimated cost of $5 billion to $6 billion while second phase is installation of compressor stations with the cost of $1.9 billion to $2 billion. Civil works of the project have already commenced in Afghanistan after the project’s ground breaking (Afghan section) was held last year.

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