Friday, July 30, 2004

Pakistan Times | Business: 'Iran-Pakistan-India Gas Pipe No Hindrance for Trans-Afghan Project'

Pakistan Times | Business: 'Iran-Pakistan-India Gas Pipe No Hindrance for Trans-Afghan Project': "'Iran-Pakistan-India Gas Pipe No Hindrance for Trans-Afghan Project'
By Tariq Saeedi - Pakistan Times Special Contributor

ASHGABAT (Turkmenistan): In a telephonic interview from Manila, a top official of the Asian Development Bank informed that the Trans-Afghan Gas Pipeline Project (TAP) was progressing satisfactorily and the pipe may be in position to start pumping gas to Pakistan by 2010. He briefed about some aspects of the project, expressed confidence that Iran-Pakistan-India Pipeline (IPI) would not hinder the progress of TAP and assured that Pakistan as sole buyer from TAP would make the project perfectly feasible.

Najeeb Jung, head of the South Asia Energy Division of the Asian Development Bank (ADB), told that TAP was moving ahead satisfactorily. He commented that in principle the progress on Iran-Pakistan-India pipeline (IPI) should not be viewed as discouraging factor for TAP. “We believe there is space for both pipelines eventually,” he said.

He also enlightened that the feasibility study of the project was based on the assumption that Pakistan would be able to absorb the entire capacity of the pipe, making the project feasible without Indian participation. “Participation of India is not essential for the viability of the Project,” said Najeeb Jung.

Highlighting the details of TAP, Jung told that the length of the pipeline would be approximately 1700 kilometers and it would run along the southern route. The pipe would originate from Daulatabat gas field in southeastern Turkmenistan, enter Afghanistan near Serhetabat (formerly Kushka), skirt west and south of the central highlands of Afghanistan, move toward Herat, pass through Kandahar and enter Pakistan at Chaman. In Pakistan, the pipeline would head east to Dera Ghazi Khan, Multan and across the Punjab to Haveli. An option would be available to extend the pipe to India through Fazilka crossing point.

Jung informed that the recommended design implies a 56-inch diameter pipeline with rated transfer capacity of 33 billion cubic meters per annum. Total cost of the project could be US $ 3.3 billion and operating cost is estimated at US $ 13.1 million per year.

Jung said, “Assuming that only Pakistan will be the major purchaser of the gas, an acceptable FIRR is estimated in excess of 15%, assuming that the operation of the pipeline commences in 2010, with almost the entire capacity being used in Pakistan alone by 2016. This implies that the participation of India is not essential for the viability of the Project.”

The draft final report of the techno-economic feasibility study has been submitted to the steering committee of the project and suggestions by the participants are being incorporated in the report.

In addition to the feasibility study, ADB has also conducted Risk Mitigation Study and Market Study (supply/demand) for natural gas in Pakistan and India.

ADB has also prepared some important documents that include:

- Framework Agreement among participating countries, signed by the heads of State in December 2002.

- Pre-qualification documents for private sector participation.

- Model Host Country Agreement

- Model Gas Sale and Purchase Agreement

- Model Transportation Agreement

Meanwhile, Turkmenistan is carrying out the audit of its Daulatabat field through a well-known international company. The audit report, giving independent estimation of the gas reserves in Daulatabat field, is expected in August 2004.

ADB is also carrying out a security study to assess the measures required to safeguard the pipeline and its operations against any disruption by terrorist threats.

On completion of feasibility study, the steering committee would take decisions to solicit interest from major gas transmission companies, formation of the consortium to build and run the pipeline, finalize necessary agreements and examine funding options.

So far, there is no proposal to extend the pipe to Gawadar seaport in Pakistan. Earlier reports suggested that an LNG station could be built at Gawadar to service worldwide LNG buyers.

India has been invited to join the project as an equal partner. Official response is still awaited from India.

ADB, on behalf of the participating countries – Turkmenistan, Afghanistan and Pakistan – is acting as the lead development partner of the project. A Steering Committee, consisting of the oil and gas ministers of the three countries and representatives from ADB, has met six times since its inception in July 2002.
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