Turkmenistan is in talks with the Islamic Development Bank, the Saudi Fund for Development and Japan's government on financing the construction of a gas pipeline to Afghanistan, Pakistan and India, a project official said on Saturday. The TAPI pipeline is supposed to carry 33 billion cubic meters (bcm) of gas a year from Turkmenistan's giant Galkynysh gas field - a project designed to ease the former Soviet state's dependence on Russia and China. Turkmenistan, which sits on the world's fourth-largest gas reserves, started building its section of the link in December. But its partners in the project - the state energy companies of Afghanistan, Pakistan and India - have yet to begin work. The 1,814-km (1,127-mile) route also faces security challenges - current plans send the underground pipeline through one of Afghanistan's most violence-wracked provinces, Helmand, where the Taliban insurgents hold sway. "The Islamic Development Bank has expressed interest and readiness to finance the project, not only on Turkmenistan's territory, but also in Afghanistan and Pakistan," Muhammetmyrat Amanov of TAPI Pipeline Company Limited told a conference in the Turkmen resort of Avaza. "We are also working with the Saudi Fund for Development ... We have had meetings with the government of Japan. They have expressed interest," he said. Amanov said the project company, controlled by Turkmen state firm Turkmengas, was working on estimating the total cost of the project. TAPI is a mutually beneficial long-term solution for the four countries. With the opening up of new markets, landlocked Turkmenistan will be able to diversify its gas exports to the east, where there is already a tremendous (and growing) demand for energy. Afghanistan, Pakistan, and India will gain a steady supply of affordable gas to power their growing economies. TAPI will go through southern Afghanistan, providing job opportunities during construction and operation and an enabling environment for developing industrial capacities in the area. In view of the project's size and complexity, it will be essential to select a consortium lead that can (i) attract financing, (ii) manage construction, and (iii) reliably operate the pipeline. The potential consortium leads of this caliber that have shown interest thus far indicated such prerequisites as: (i) equity investment by representative firms of the government, (ii) on-shore gas participation rights in Turkmenistan, and (iii) security arrangements. The parties have not yet reached a consensus on how to manage these expectations and need further evidence of what is actually required. Market and merits/demerit analysis are needed to consider all the options in dealing with and balancing the requirements of potential consortium leads. Lessons learned from previous technical assistance (TA) projects showed that: (i) ample time, (ii) strong coordination, (iii) timely monitoring, and (iv) analytical backing for the various options are needed when negotiating among the parties. For example, the negotiations for the model GSPA took much longer and needed much more background work than anticipated. GSPA–related agreements and consortium-related agreements are expected to require the same strategy and care. — Agencies
