TAPI AS AN ENERGY BRIDGE OF PEACE OF THE MILLENNIUMAugust 24, 2016
As a result of the active foreign policy of esteemed President, Turkmenistan is turning into a place of world significant proposals, initatiaves and their solutions. This is vividly evidenced by the launch of the construction of the gas pipeline Turkmenistan-Afghanistan-Pakistan-India (TAPI) on 13 December, following the glorious holiday on the occasion of the 20th anniversary of the country’s Neutrality. The TAPI project has become another successful step taken by the President of Turkmenistan Gurbanguly Berdimuhamedov for the export of energy resources of the country to the world market and implementation of the energy strategy aimed at creating a system of multi-vector gas pipeline.
Natural gas – the most beneficial energy resource
Natural gas has an advantage over energy resources, oil, coal in terms of economic benefit and clean ecology. This conclusion was once again confirmed at the Third Summit of the Heads of gas exporting states held in Tehran on 23 November 2015. The topic of the summit “Natural gas as the best fuel for sustainable development” is not a mere chance. The increasing significance of “blue gold” in energy market was emphasized at the summit. In 2014 demand for natural gas was 3.7 trillion cubic meters; however, in 2040 it will grow by 32 percent, making about five trillion cubic meters. At this high level summit of the Forum, which brought together twelve member states and six observer states, the attention was focused on issues of creating opportunities of the gas market, encouraging consuming gas, since it is more accessible, economically beneficial and ecologically clean energy resource.
In his historic speech made at the UN Summit on the Post-2015 Development Agenda the President of Turkmenistan Gurbanguly Berdimuhamedov emphasized the need to create a system for ensuring access to affordable, reliable, sustainable and modern energy for all. Here it is worth noting that this proposal was included into the post-2015 Agenda, which shows the success of the international initiatives of Turkmenistan on energy. At the UN sessions Turkmenistan set forth a proposal on the creation of a universal mechanism for the stable and reliable transit of energy resources. The adoption of the Resolutions on the „Reliable and Stable Transit of Energy Resources and Its Role in Ensuring Sustainable Development and International Cooperation” on 19 December 2008 and later on 17 May 2013 has become a clear evidence of the international recognition and broad support of the international initiatives of the Turkmen Leader.
Turkmenistan, as a large energy power of the world (Turkmenistan ranks fourth in gas reserves of the world, second in gas field), is carrying out large-scale work to export energy resources by diversifying directions of gas pipelines. The country is trying to be fair in the issue of energy supply. Turkmenistan believes that energy projects should not be politicized and recognizes the need to keep prices and tariffs moderate and find solutions that take into account the interests of all parties.
The Turkmenistan-Uzbekistan-China gas pipeline and the second direction of the gas pipeline to Iran are large projects testifying to the fact that Turkmenistan is committed to its word and occupies a significant place in the world energy market. The Turkmenistan-Afghanistan-Pakistan-India gas pipeline is one of such large transnational projects.
On the history and concrete steps of the project
At first only three countries expressed their interests in the project – Turkmenistan, Afghanistan and Pakistan. The first agreement on the project for the construction of this gas pipeline was reached at the meeting of heads of three countries held in Islamabad on 30 May 2002. The tripartite Framework Agreement was signed in Ashgabat on December 26-27 of the same year. Concrete steps taken for the implementation of the project began in 2007. The President of Turkmenistan Gurbanguly Berdimuhamedov had several meetings with the heads of state and government of the parties concerned in this issue. The most important of them is the high-level meeting among Turkmenistan, Afghanistan, Pakistan and India held in Ashgabat in December 2010. This meeting, arranged at the initiative of the Turkmen Leader, gave an impetus to the preparation stages of the project. It is known that the outcome of the meeting was the signing of the Framework Agreement on the gas pipeline and intergovernmental agreement on the implementation of the TAPI gas pipeline project.
Since then the TAPI gas pipeline has been on the agenda all the time. Later the participating states had meetings of the technical and economic groups. The Chairing Committee also took an active place. At those meetings stage-by-stage terms of the projects were specified. Agreements on purchase were signed there. The international financial institution Asian Development Bank Transaction Council and the Turkmengas State Concern “TAPI Pipeline Company Limited” were elected as chiefs. The joint-stock and investment agreements were reached by members of the Consortium “TAPI Ltd” headed by the Turkmengas State Concern.
With the instruction of the President of Turkmenistan, business forums have been arranged in different parts of the world (Singapore, Nyu-York, London, Manila, etc.) in order to activate the TAPI project. Their aim was to support the project with information and engage international oil and gas companies and financial institutions in the creative consortium for the project’s realization.
Thus, after these important steps, on 6 November 2015, esteemed President signed a historic Decree on the start of the construction of the gas pipeline passing through the territory of Turkmenistan.
Financing the project and technical indicators
Large financial institutions of the world are interested in financing the TAPI project. The major one is the Asian Development Bank (ADB). On 19 November 2013 in the Turkmen capital, within the framework of the International Oil and Gas Forum, a Service Agreement on the TAPI gas pipeline was signed between the Transaction Council and the Turkmen State Concern, the Afghan Gas Corporation, Pakistan’s “Interstate Gas Systems (Private) Limited” India’s “Gail (India) Limited” and the Asian Development Bank. Therefore, at present the Asian Development Bank acts as the Transaction Council on the TAPI gas pipeline project.
According to a technical and economic basis of the project, the total length of the gas pipeline is 1814 kilometers. Its 214 kilometers pass through Turkmenistan, 774 kilometers through Afghanistan, 826 kilometers through Pakistan, reaching the populated area of Fazilka at the border with India. The annual capacity of the gas pipeline makes 33 billion cubic meters. It is expected to send 90 million cubic meters of natural gas a day, 14 million to Afghanistan; Pakistan and India will each get 38 million a day. The construction of the TAPI gas pipeline was launched on 13 December 2015 from the Galkynysh gas field located in the eastern region of Turkmenistan. The Consortium will be in charge of interrelations in constructing, financing, providing access and using the TAPI gas pipeline.
The Galkynysh gas deposit will serve as a basic source of TAPI. According to the preliminary estimation of independent international experts, the reserves of these fields will make 26 trillion 200 milliard cubic meters. This ranks Turkmenistan as the fourth largest country in gas reserves. The complex development of this large gas pipeline started in December 2009. In December of that year, at the initiative of esteemed President, the Turkmengas State Concern concluded an agreement worth 10 billion US dollars with the companies of the People’s Republic of China, the United Arab Emirates and the Republic of Korea. Since then enormous work has been implemented in this field. At the preliminary stage it is envisaged to produce 30 billion cubic meters of natural gas annually. The reserves of this field will provide a good opportunity to realize the TAPI project. The first facilities of the project were commissioned during the state visit of the Head of the People’s Republic of China, Xi Jinping, in September 2013. A new direction (D) of the gas pipeline to China from this field was agreed during the visit. The second stage of the construction of facilities for the industrial development of the field Galkynysh was started in 2014. It is planned to produce 30 billion cubic meters annually.
In early 21st century, 45 percent of oil produced in the world, 19 percent of natural gas, 3 percent of electric energy was sold by delivering to the international energy market through the territory of at least one state. As shows the world practice, big natural gas producing states (Norway, Algeria) sell it on their territories. In energy policy Turkmenistan strictly follows principles of selling natural gas to customers by diversifying its directions. This is also related to the TAPI gas pipeline project.
During the ceremony of launching the construction of the TAPI gas pipeline, a Memorandum on energy was signed among Turkmenistan, the Islamic Republic of Afghanistan and the Islamic Republic of Pakistan, as well as an Agreement on the construction of the TAPI gas pipeline was concluded among the “Turkmengas” State Concern and the“Afghangas Enterprise” as well as “Inter State Gas Systems /Private/Limited” company and the “Gail/Hindistan/Limited”, which once again strengthened and guaranteed the legal framework of the project.
Afghanistan: TAPI as a guarantee of peace
Afghanistan is taking a keen interest in the implementation of the TAPI gas pipeline. Even though Afghanistan has enough reserves of natural gas, oil, copper, precious metals, it does not have infrastructure to industrially develop them. Therefore, this project will play a significant role in reviving the state and economy of Afghanistan. Speaking at the 65th session of the UN General Assembly on Turkmenistan’s approaches to the settlement of the situation in Afganistan esteemed President once again stated about the need to intensify efforts aimed at the construction of the TAPI gas pipeline. After the realization of this project, the neighbouring state will meet its demands on energy resources via Turkmen blue fuel. According to the estimations of experts, Afghanistan will gain enormous economic benefit from the transit of Turkmen gas through the TAPI project – approximately 1 billion US dollars; and more than twelve thousand jobs will be created. The project will lead to the allocation of international investment to the Afghan economy. The most important thing is that it will contribute to ensuring political stability in Afghanistan and the region.
Pakistan: TAPI as an impetus to economic development
How can the importance of the TAPI gas pipeline for the rapidly developing economy of Pakistan be explained?! The answer of the question can be: Not only will the project bring economic benefit to Pakistan, but it also will help reduce conflicts, disputes on border and territory with India, which last for nearly 70 years. Pakistan needs to import natural gas. According to the data of experts, the reserves of natural gas in the country make about 1400 billion cubic meters. The annual production of natural gas amounts to 40 billion cubic meters. Yet, in 2010 the shortage of natural gas was 44 billion cubic meters due to the weak infrastructure of the country for producing, processing and sending natural gas. This, in turn, means the growing demand for a guaranteed source of natural gas.
India: TAPI as the gas consuming market in the future
Energy resources are very important for rapidly developing India. In 2014 India consumed 50.6 billion cubic meters of natural gas. This indicator is expected to increase up to 121 billion cubic meters in 2030, 174 billion cubic meters in 2040. According to the estimations of the International Statistics, an annual gas import of India will make 30 billion in 2020, 66 in 2030, 85 billion cubic meters in 2040; thus, the half of the gas to be consumed in the country will be imported from abroad.
This, in turn, shows a keen interest of India in the realization of the TAPI project. After the implementation of the TAPI project, India will possess the first transnational gas pipeline. At present, the country is purchasing condensed gas and importing it in tankers.
Turkmenistan, guided by the legal status of permanent Neutrality, aims to ease political conflicts lasting between Pakistan and India for ages by laying the TAPI gas pipeline. Not only will this project bring economic benefit, but also shows the intention of Turkmenistan to turn this energy bridge into a bridge of friendship. In this regard, Ashgabat will serve as a mediator between Islamabad and Delhi.
TAPI as a bridge of peace, friendship and good neighborhood
In implementing any giant project, it is necessary, first of all, to overcome risks. Regarding the TAPI project, it is important, above all, to reach the safe transit of Turkmen gas. This should be guaranteed primarily by Afghanistan and Pakistan. According to the international community, responsibility lies on those states. The economic and commercial benefit of the project is evident. Moreover, international experts also mention about political advantages of the project. This is about bringing stability and peace in Afghanistan in the past 30 years. If we talk about economic advantages, there is no doubt that Turkmen blue fuel will contribute to the revival of the Afghan economy, the industrialization of the country and improvement of the welfare of the population of the country. The highway to be constructed along the gas pipeline and various infrastructure facilities will intensify friendly relations among the four states.
In the future the scope of the TAPI is to be extended. Bangladesh has already expressed its interest in this project. Four years ago, precisely in the autumn of 2011, the Turkmen gas, passing 8700 kilometers along the bank of Amuderya river to 15 districts of China, reached the coast of the Pacific Ocean. It is expected that in the future along the south direction the Turkmen gas will be send through the three states and come nearer to the Indian Ocean.
In his historic speech at the International Conference “Neutrality Policy: International Cooperation for Peace, Security and Development” the President of Turkmenistan Gurbanguly Berdimuhamedov, emphasizing that the legal status of Turkmenistan’s Neutrality created ample possibilities for the effective realization of joint international projects, stated “We have never politicized and politicizing economic cooperation. This fact is properly understood and highly appreciated by our partners and enables to develop equal, mutually beneficial relations with different countries and companies.”
The TAPI project is not only mutually beneficial energy and economic project, but also a uniting project, a clear evidence of ensuring the balance of interests of all energy producers, transit suppliers and consumers.
TAPI as a bridge of peace, friendship and good neighborhood.
Institute of International Relations of
the Ministry of Foreign Affairs of Turkmenistan,
Vice-rector for Academic Affairs