Bid & Tender
TAPI Update: Consortium Leader Picked for Trans-Afghan Pipeline Gas Project

Date : Aug 07, 2015

The pipeline intended to forge a new export route through Afghanistan for Turkmenistan’s natural gas riches has made a fresh stride with the naming a consortium leader for construction.


Turkmenistan’s state news agency reported on August 6 that state-owned Turkmengaz will be in charge of bringing TAPI — named for the initials of the four countries it crosses — into existence.


The decision was taken during a TAPI management committee meeting in Ashgabat, the Turkmen state news agency reported. Senior officials from the Asian Development Bank, which is acting a transaction adviser on the project, were also in attendance.


“In its capacity as leader of the consortium of the TAPI Limited pipeline company, Turkmengaz will head coordination on construction, financing, management and use of the TAPI pipeline,” said an official statement cited by the state news agency.


Backers of the project, which include the United States and the European Union, appear to be unfazed by occasional and loosely sourced reports of unrest along the Turkmen-Afghan border that would stand to disrupt any major construction work. Security issues do not typically feature in official statements on TAPI, which suggests either that anxieties are overblown or that the parties to the project are simply hoping for the best.


The statement notes that Turkmengaz has more than 50 years experience in the development and transportation of gas resources, as well as in the construction of pipelines. But it also notes hopefully that other large companies will join the consortium as the project moves forward.


Which international companies are going to wish to embark on a potentially hazardous enterprise is matter for conjecture. Relations between Turkmenistan and Russia are sufficiently frosty to rule out any companies from Russia. Western companies have been stymied in their long-term ambitions to gain a perch in Turkmenistan’s onshore gas fields, so involvement in a mere transportation enterprise may be of limited appeal to them.


The Chinese have now developed extensive expertise in similar transportation projects in Central Asia, although this particular route is transparently intended to loosen their stranglehold on Turkmen gas, so there is little in it for them.


TAPI is designed to carry 33 billion cubic meters of Turkmen gas annually over a 30-year period to buyers in Afghanistan, Pakistan and India. Construction is due to get underway in December.


Building work could take around three years, according to an estimate provided to Azeri news website Trend by a senior adviser with the Asian Development Bank, Chin Choon Fong.


Completion costs are currently projected at more than $10 billion.


The route is intended to broaden Turkmenistan’s export options, which are at the moment limited to China, Russia and Iran.


Relations between Turkmenistan and Russia have experienced substantial cooling, however. Russia’s Gazprom this year reduced the volume of its annual gas purchases to 4 billion cubic meters, and has now initiated arbitration procedures to lower the price it pays for the fuel.