US' Chevron, Russian major Gazprom show interest

GAIL (India) may take equity participation in the consortium mandated to construct the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline project, which will transport gas from Turkmenistan.

Sources privy to the development said the Government-to-Government agreement allows India to become a partner in the consortium, if so desired. The road-show to invite players to participate in the project is expected to kick off in September.

In the TAPI project, which has US backing, big American companies such as Chevron and ExxonMobil, and Russian company Gazprom, are said to be interested in becoming part of the consortium.

The decision with regard to the consortium will be made jointly by member-countries in consultation with the Asian Development Bank (ADB), which will render technical advice with regard to the terms and conditions for potential consortium partners. ADB will also be involved in the final selection process.

On May 23, GAIL signed the Gas Supply Purchase Agreement (GSPA) with TurkmenGaz, Turkmenistan's national oil company, for the $7.6-billion project.

The envisaged 1,080 km pipeline (144 km in Turkmenistan, 735 km in Afghanistan and 800 km in Pakistan) will have a capacity to transport 90 mscmd of gas — 38 mscmd each for India and Pakistan and the remaining 14 mscmd for Afghanistan.

The pipeline is expected to be operational in 2018 and supply gas over a 30-year period. The GSPA contains all the contractual terms and conditions and will be signed bilaterally between the members.

Member-countries of the TAPI project have agreed to a uniform transit fee of 49.5 cent. The transit fee paid is also for the security of the network from where the pipeline is passing.

Transit fee is a crucial issue in such projects as invariably the country at the tail-end of the project ends up paying the most. The transportation charges will be finalised when the project gets implemented by the consortium nominated and all costs are known. India would like the delivered price (landed cost) of Turkmenistan gas to be in the same range for all buyer countries — Afghanistan, Pakistan and India.

India also wanted the Turkmenistan gas price to be more attractive than the current long-term contract price. Rough estimates show that the Turkmenistan gas may cost around $13/mBtu.

The source of the gas is the South Yoiotan Osman field, recently renamed Galkynysh, which has been certified by an international consultant as holding proven recoverable gas reserves of 16 trillion cubic metres.

(This article was published on June 8, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.