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Turkmenistan-Afghanistan-Pakistan Gas Pipeline Project In Trouble

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All Headline News (AHN)
November 29, 2007 7:50 a.m. EST

Siddique Islam – AHN South Asia Correspondent

Islamabad, Pakistan (AHN) – The Turkmenistan-Afghanistan-Pakistan (Tap) gas pipeline project is unlikely to materialize due to Russian gas giant Gazprom’s fresh agreement with Turkmenistan for increased Europe-bound gas supplies at higher rates.

Pakistan was weighing the new developments in the background of a just postponed ministerial meeting of the three countries and a revised agreement between the Russian company, Gazprom and Turkmenistan, the Dawn, a local newspaper, reported quoting government sources.

Under the revised understanding with Gazprom, Turkmenistan would increase gas deliveries to it to about 50 billion cubic meter (BCM).

Gazprom that delivers about one quarter of Europe’s total gas needs would now pay US$130 per 1,000 cubic meters to Turkmenistan early next year and then $150 per 1,000 cubic meter by the end of the next year instead of current rates of $100 per 1,000 cubic meter, according to reports.

Turkmenistan and Gazprom have a 25-year gas supply agreement valid until 2028 but Ashgabat 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.

Pakistan has planned to complete the project by 2012 under a energy security plan, but the deadline is becoming beyond imagination, an official said.

The 1,680 kilometers (1041.6 miles) TAP pipeline of 56-inch diameter needs at least 30 BCM of gas per year from Turkmenistan to Pakistan via Afghanistan.

The project cost has now been estimated at $5.3 billion. India had also been invited to join the project last year that started attending steering committee meetings as an observer.

“Further progress will depend on the robustness of the gas reserves data, certification of the reserves, extent of possible private interest, ability and willingness of Turkmenistan to fulfill its commitments to Gazprom and still supply Pakistan” the World Bank (WB) said according to the newspaper reports.

Challenges in the TAP project also include mitigation of the security risk in Afghanistan, improvement in India-Pakistan relations, and programs to minimize or phase out fuel subsidies in both countries and finally the ability of the pipeline options to withstand competition from liquefied natural gas (LNG) in the long run, the WB noted.

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Written by afghandevnews

November 29, 2007 at 7:34 pm

Posted in Economy, Trade

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