By Robert M Cutler
MONTREAL - Pakistan and Turkmenistan have reportedly reached bilateral agreement over the price of gas through the planned Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline. An editorial in the national Pakistani newspaper The Dawn treats the agreement as an accomplished fact, and a former director-general of the Associated Press of Pakistan writes in the UAE-based Khaleej Times that the two sides will sign the agreement on November 15 in Ashgabat.
According to this credible but unconfirmed published information, Pakistan's price to Turkmenistan will be 69% of Brent crude oil parity price (including transit fee) for between 13 and 14 billion cubic meters per year (bcm/y). This figure could exceed 20 bcm/y if a facility is constructed for export of liquefied natural gas (LNG) from the Pakistani port city of Gwadar in the southwest of the country.
Just a few days earlier India's president Pratibha Devisingh Patil, in his congratulations on the 20th anniversary of Turkmenistan's independence, expressed his happiness over the TAPI natural gas pipeline's "successful promotion". India, which signed a bilateral price accord with Turkmenistan some time ago, will receive the same quantity of gas as Pakistan (not counting the Gwadar extension), and Afghanistan will get 5 bcm/y.
Nor is this necessarily the upper limit. Turkmenistan's Oil and Gas Ministry concluded from a survey last year that by the end of the decade the total demand for natural gas in Pakistan and India together might reach as much as 186 bcm/y, whereas their indigenous production could not exceed 100 bcm/y, according to the independent Trend News Agency in Azerbaijan.
Turkmenistan's Oil and Gas Minister Bayramgeldy Nedirov, at an international conference on energy security in Ashgabat sponsored by the Organization for Security and Cooperation in Europe (OSCE), also indirectly confirmed at the weekend the agreement with Pakistan, saying, "Preparations are under way for the imminent signing of an agreement on the sale and purchase of natural gas." Reuters quoted Nedirov as adding, "There are no doubts that this [TAPI] project will be realized."
The deal will have a lifespan of 30 years and require 1 trillion cubic meters of Turkmenistan's natural gas, according to Nedirov. President Gurbanguly Berdimuhamedow said last year that this gas would come from the South Yolotan field. The most recent iteration of the British firm Gaffney Kline's audit of South Yolotan's reserves increased the original estimate to a range of 13.1 to 21.2 trillion cubic meters. The pipeline is planned for a length of 1,700 kilometers, running to Herat in Pakistan, then along (perhaps underground) the Herat-Kandahar highway, passing through Quetta and Multan to the Indian border town of Fazilka.
There is no announced agreement between Afghanistan and Turkmenistan over the gas price, although the implicit calculation of transit costs in the Pakistani deal suggests that a figure has been estimated. That some agreement may appear on the horizon is suggested by the modest steps that Turkmenistan has been taking to promote economic development, and thus security, in Afghanistan.
Earlier this year, the two countries agreed to build a 120-kilometer railway line between Ashgabat and Kabul, with Turkmenistan constructing 85 kilometers internally from the Atamyrat district (Lebap province) to the border town of Ymamnazar, and the Afghan extension running to Akina also to be planned and constructed by the Turkmenistan side, in accordance with Kabul's suggestion. A southward extension to the Afghan town of Andkhoy (Faryab province) would subsequently be added. Turkmenistan has also declared its intention is increase electricity exports to Afghanistan. Earlier this year, Berdimuhamedow authorized construction of a new supply line to quintuple this level to 300 megawatts per year.
At the OSCE-sponsored conference in Ashgabat, another Turkmen official speaking anonymously told Reuters that Berdimuhamedow would sign an agreement to increase the amount of natural gas being supplied to China. The government in Ashgabat has said that it expects to export 17 bcm to Beijing this year, and possibly as much as 20 bcm next year. Total exports to China could eventually ramp up to as much as 60 bcm/y.
Berdimuhamedow himself took the opportunity of the conference to underline his foreign ministry's rejection last week of Russia's assertion of veto power over the Trans-Caspian Gas Pipeline (TCGP) project for natural gas to Azerbaijan and, from there through Georgia and Turkey, to Europe. Putting his prestige publicly on the line, he declared to the assembled international diplomats and representatives of global energy companies, that exports to Europe were "an important vector of our new energy policy", indeed "the most important characteristic of Turkmenistan's foreign-policy strategy", while the "trans-Caspian pipeline system is correspondingly an important project testifying to Turkmenistan's readiness for mutually advantageous cooperation with all interested parties".
Two days after the conclusion of the conference, the Turkmen government announced the creation of a bilateral working group on energy cooperation with Romania. However, the gas that Turkmenistan would export to Azerbaijan for transit via Turkey (possibly through the proposed Nabucco pipeline) to Europe would not go through Romania. Turkmenistan is several thousand kilometers from Romania as the crow flies, across the Caspian Sea and the Black Sea basins.
The creation of this working group can therefore only mean that the White Stream project is now an active possibility on Ashgabat's radar. This project, the consortium for which did not put in a bid for Azerbaijan's Shah Deniz Two gas, proposes a subsequent pipeline for additional gas from Turkmenistan across the South Caucasus and under the Black Sea from Georgia to Romania.....