The US-backed Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline Project is no longer a pipe-dream like the Iran-Pakistan-India (IPI) project, as India inked the gas sale and purchase agreement (GSPA) with Turkmenistan on Wednesday.

GAIL (India) Ltd signed the GSPA with TurkmenGaz, Turkmenistan's national oil company, for the $7.6-billion TAPI project, which would bring gas from that country. An Indian delegation, led by the Petroleum Minister, Mr S. Jaipal Reddy, is in Turkmenistan, where the GSPA was signed.

Last week, the Cabinet had given its nod for signing the GSPA. The envisaged 1,680 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. Subsequent to the GSPAs, bids for building and operating the pipeline will be invited.

Transit fee

Member countries of the TAPI project have agreed to a transit fee of about 50 cents. The transportation charges will be finalised when the project gets implemented by the consortium nominated and all costs are known, sources privy to the development said.

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. However, sources said India and Pakistan will pay a uniform transit fee to Afghanistan.

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 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 $10/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.

Speaking at the 3rd Turkmenistan Gas Congress and Exhibition in Awaza, the Petroleum Minister said “in our inter-connected and globalising world, economics does shape politics”. Gas consumption in India is expected to grow from the current 166.2 mscmd to 473 mscmd in 2017. At present, natural gas accounts for around 10 per cent of India's primary energy basket against the world average of 24 per cent.