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Successful completion of TAPI project in doubt

Oil&Gas Materials 3 May 2016 16:22
Successful completion of TAPI (Turkmenistan- Afghanistan – Pakistan – India) gas pipeline project is in doubt, Andrew Neff, principal analyst at the Petroleum Sector Risk Group, IHS Energy believes.

Baku, Azerbaijan, May 3

By Elena Kosolapova - Trend:

Successful completion of TAPI (Turkmenistan- Afghanistan - Pakistan - India) gas pipeline project is in doubt, Andrew Neff, principal analyst at the Petroleum Sector Risk Group, IHS Energy believes.

"Without a commercial champion, the project is going to continue on the same slow 'progress' path at present, albeit with a successful completion to construction very much in doubt," Neff told Trend.

TAPI gas pipeline will make it possible to deliver gas from Turkmenistan, which ranks fourth in the world on biggest gas reserves, to large and promising markets of South and Southeast Asia. The pipeline is to run from Galkynysh - the largest gas field in Turkmenistan - through the Afghan cities of Herat and Kandahar, and finally reach the Fazilka settlement located near the India-Pakistan border.

The estimated cost of the project will exceed $10 billion. The annual capacity of the gas pipeline will reach 33 billion cubic meters. It is planned that the total length of the TAPI pipeline will be 1,814 kilometers. Some 214 kilometers will pass through the territory of Turkmenistan, 774 kilometers - Afghanistan, 826 kilometers - Pakistan.

Turkmenistan started construction of its section of TAPI pipeline in Dec. 2015 and it is expected it will take three years. It is not yet determined when Afghanistan and Pakistan will start construction their sections of the pipeline.

Neff noted that Turkmenistan can build its section using state funds, but the issue with the commercial financing for the overall project - namely, to underpin spending on construction of the Afghanistan section is still unclear.

"I don't see any of the other countries starting construction on their sections without some clarity on financing for the overall project," the expert said.

Commenting on the recent Turkmenistan's invitation to Saudi Arabia and Qatar to join TAPI project, Neff said that it suggests that the Turkmen government is still keen on state financing, albeit now from other states, not just the 4 countries involved.

This indicates that Turkmenistan is still not ready to change its upstream policy approach to allow investors to hold equity access to the gas development projects themselves, he said.

Meanwhile, Turkmenistan announced that the construction of its section of the TAPI pipeline is advancing at high rate.

Edited by SI

Follow the author on Twitter: @E_Kosolapova

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