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$4 billion gas pipeline project to face delays

ISLAMABAD — The much talked about $4 billion Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline project has hit the snags after Russian gas giant Gazprom's signed an agreement with Turkmenistan for increased Europe bound gas supplies at enhanced rates.

The project is unlikely to materialise even in the next decade as Gazprom would be paying about 50 per cent higher price to Turkmenistan with effect from next year. Earlier, Pakistan government was hoping that the Russian firm would cooperate and help complete the project.

Informed sources said that Pakistan was weighing the new developments in the background of a just postponed ministerial meeting of TAP countries and a revised agreement between Gazprom

and Ashgabat. The revised agreement apparently means that the

central Asian state would have little surplus gas available for export to South Asian region. Not only that, the price could make become a stumbling block because Pakistan and India may find it "unaffordable for their economies" when compared with the much prosperous European region.

These sources said Pakistan was surprised to know at the eleventh hour that Ashgabat was holding an international energy conference on dates that were fixed for a ministerial steering committee meeting in Islamabad, i.e. November 27-28. Pakistan planned under the 30 year energy security plan to complete the project by 2012 — a deadline becoming even beyond imagination, an official said.

The sources said under the revised understanding with Gazprom,

Turkmenistan will increase gas deliveries to the Russian firm to about 50 billion cubic metres (BCM). Gazprom that delivers about one quarter of Europe's total gas needs would now pay $130 per 1000 cubic metres to Ashgabat early next year and then $150 per 1000 cubic meter by end of next year instead of current rates of $100 per 1000 cubic meter. Turkmenistan and Gazprom have a 25 year gas supply agreement valid until 2028 but Ashgabat, these sources said, uses export projects like TAP to improve its price with Gazprom. The world's 10th largest gas producer, Turkmenistan's total gas output currently is slightly higher than 60 BCM a year. Last year, its total exports stood at around 45 BCM.

Since the death of former President Saparmurat Niyazov last year, the Turkmen economy is opening up for foreign investment. His successor President Gurbanguly Berdymukhammedov government plans to quadruple its gas output to about 250 BCM by 2030 and

Ashgabat would need more than $25 billion to develop its offshore Caspian reserves.

Therefore, enough reserves are apparently not available in the immediate future for a south Asian gas pipeline, these sources said.