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

By Khalid Mustafa
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.

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.