Turkmenistan stretches a pipeline to South Asia

Ashgabat stands firm on the principles of the declared multi-directional approach to energy supply and intends to bring to fruition the idea of the transnational pipeline Turkmenistan-Afghanistan-Pakistan-India (TAPI). A detailed discussion of the project will be held in September during a bilateral meeting between the President of Turkmenistan Gurbanguly Berdymukhamedov and Afghanistan – Hamid Karzai in New York. Experts say that Ashgabat would like to increase the number of its energy partners, all the while maintaining friendly relations with Moscow.

Heads of state of Turkmenistan and Afghanistan spoke over the telephone on Tuesday about issues concerning bilateral relations and agreed to first meet in New York during the 65th Session of the UN General Assembly in September, and then continue discussions in Ashgabat.

The dates for Karzai’s visit to Turkmenistan are currently being determined, reported the press service of the Turkmen government. Heads of the two states plan to review in great detail the possibility of building the transnational pipeline TAPI which, according to Berdymukhamedov, is designed to contribute to the economic prosperity of the entire region. Simply put, they will discuss the list of potential investors willing to allocate $3.5 billion.

The idea of building the TAPI gas pipeline has existed since 1993 when it was discovered that Turkmenistan has one of the largest gas reserves and will not be able to manage them independently. The only buyer of the Turkmen blue fuel was Russia’s Gazprom, which owns the Central Asian pipeline system. At that time, Ashgabat faced restrictions on export of its natural gas and began looking for alternative energy supply channels. In 1995, President Saparmurat Niyazov signed an agreement with Pakistan’s Prime Minister Benazir Bhutto on the development of a technical and economic assessment of this project. The flow capacity of the pipeline, stretching 1,680 km, with 735 km passing through Afghanistan, amounts to 33 billion cubic meters of gas per year. The resource base will be Turkmenistan’s Dovletabad gas field. However, in order to implement these plans, the instability in Afghanistan must first be overcome. “Turkmenistan’s plans to build the TAPI – is a political game, because this project currently cannot be of any practical use due to political and military reasons,” Mikhail Krutikhin, a partner and analyst with RusEnergy, told Nezavisimaya Gazeta (NG).

It appears that in Ashgabat, officials tend to think otherwise and are hoping that their annual gas export will earn them up to half a billion of dollars in net profits. This is shown by the meeting of the Cabinet of Ministers, which was held in August of this year and focused on the country’s new energy strategy. In regard to the southern route, President Berdymukhamedov demanded that necessary measures be taken so that all the agreements for the sale of gas through TAPI are drafted by the end of this year.

After Gazprom had reduced the import of Turkmenistan’s gas four-fold, Ashgabat was forced to decide for itself on several fundamental questions. In particular, it needed to obtain independence from Moscow in the transportation of its gas and work directly with the major energy consumers, without Gazprom as an intermediary. According to experts, Ashgabat has accomplished this task.

“Recently, Turkmenistan’s energy policy has been distinguished by common sense. Ashgabat was not chasing investors, but waiting until it was presented with various options so as to choose the best ones,” says Krutikhin. In his opinion, good partnership is possible with China, with which an agreement for an annual supply of 40 billion cubic meters of gas and a loan in the amount of $4 billion has already been signed. Beijing may possibly issue another credit in the amount of $4.18 billion for the development of the country’s largest gas field, South Yolotan, the reserves of which are estimated to be anywhere from 4 to 14 trillion cubic meters of gas.

The possibility of increasing gas supplies to Iran is being considered. Today, 30 billion cubic meters of gas are annually supplied to Iran through two gas pipelines. Moreover, Ashgabat received a proposal from European companies to develop a route to Azerbaijan, which means laying the pipeline under the sea. In any case, the government of Turkmenistan is currently studying the proposal.

Foreign companies are also starting to engage in independent work in Turkmenistan. Italy’s Eni could become the second foreign company, after China’s NPC, to be given a contract for the development of Turkmenistan’s near-shore gas field. Applications for the development of the Caspian shelf were also submitted by Chevron, TX Oil, and Conoco Philips, as well as a company from the United Arab Emirates, Mudabala.

Another project with the involvement of Turkmenistan is Nabucco. Ashgabat, after signing a declaration on the supply of 10 billion cubic meters of gas annually, took a break in making a final decision. Nevertheless, it initiated the idea of building a national pipeline, which will unite the eastern and western regions. “It’ won’t be particularly difficult for Ashgabat to establish gas transfer to Nabucco from the Caspian offshore in the next couple of years,” says Krutikhin. As for expansion of partnership with Russia, that’s not on Ashgabat’s agenda.

Nevertheless, Shokhrat Kadyrov, an expert on Turkmenistan, argues that in its multi-directional energy policy Ashgabat is considering Moscow’s opinions. And a multi-directional policy is none other than business. “On another hand, there is a political factor: to play along with the US, which lobbied the TAPI project so as to show that a successful anti-terrorism operation in Afghanistan is able to provide concrete results in the region. Meanwhile, for the president of Turkmenistan, the TAPI project is a good way to get involved in world politics and strengthen its regional positions,” says Kadyrov.

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