The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project may have more than one lead consortium partner for its execution.

The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project may have more than one lead consortium partner for its execution.

The seven global majors interested in the project are Chevron, Shell, BP, BG, Petronas, RWE, ExxonMobil, sources in privy to the development said.

Road shows

At the recent road-shows inviting players to participate in the project, it appeared that there could be more than one consortium leader, sources said.

Though the TAPI member-countries are keen to be minority partners in the consortium, they need one big company to act as a prime mover to take this project forward, the sources added.

According to reports, the project, which has US backing, had initially seen interest from Chinese and Russian firms as well.

But during the road-shows in Singapore, New York and London, companies from these countries were not present.

The road-shows were also held to invite financiers for the project. The participants included, among others, SBI, US EXIM, Citigroup, Morgan Stanley, Deutsche Bank and Macquarie Bank.

The decision with regard to the consortium leader and investors, which will be made jointly by member-countries in consultation with the Asian Development Bank (ADB), is expected to be completed in a year’s time. The work on network is expected to start in 2015.

Turkmenistan’s South Yolotan-Osman gas-field is the source for the TAPI pipeline. In fact, the gas source has also attracted the likes of ExxonMobil and Chevron for upstream participation. However, the Turkmen authorities have made it clear that no equity participation in the upstream development of this giant field, recently renamed Galkynysh, could be considered.

The authorities will offer service contracts for this purpose.

Service contract

In a ‘service contract’, payment is made in accordance with the services rendered. However, the company rendering such services is not entitled to any share in oil/gas in that block.

According to sources, pipeline building and operation are, in themselves, an economically viable proposition.

The estimated $7.6-billion, 1,680-km pipeline (144 km in Turkmenistan, 735 km in Afghanistan and 800 km in Pakistan) project will have the capacity to transport 90 mscmd of gas — 38 mscmd each for India and Pakistan and the remaining 14 mscmd for Afghanistan.

Transit fee

The pipeline is expected to be operational in 2018 and supply gas over a 30-year period. The member-countries of the project have agreed to a uniform transit fee of 49.5 cent.

The fee is also for the security of the pipeline network.

The transit fee is crucial as, invariably, the country at the tail-end of the project — in this case, India — ends up paying the most.

The transportation charges will be finalised when the project is implemented by the consortium nominated and all costs are known.

Rough estimates show that the Turkmenistan gas may cost around $13/mBtu at landfall point in India.

(This article was published on October 2, 2012)
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