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Turkmenistan's South Yolotan – Osman gas fields, which will be source for the Turkeminstan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline project, is attracting ExxonMobil's and Chevron's of the world 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, according to their present Government policy. The Turkmen will offer service contracts for this purpose, sources privy to the development said.
Phase I of South Yolotan is being developed (for gas supplies to China beginning 2013) on service contract basis. Those engaged in the job include Hyundai, Petrofac, and CNPC. Phase II of this giant field is for supplies to TAPI pipeline.
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.
While in a production-sharing agreement (PSA), the company concerned takes calculated risk in investing in an upstream venture and is entitled to its share (as stated in the agreement) in the resulting oil/gas production.
The licensing round in India is based on production-sharing contracts. This helps as the company brings both investment and technology for upstream development and if commercial discovery is made, for the development of the field. This also helps in increasing the pace of upstream work.
Most countries award PSAs but a few countries go along the service contract route. Iran and Turkmenistan (for onshore fields) are among the few favouring service contracts.
Roadshows
Sources said that pipeline building and operation is in itself an economically viable proposition. Some of these global majors have envisaged interest for participating in the TAPI pipeline.
“But, we have to await response during the roadshows to decide further,” the sources said.
The roadshows will be held at Singapore, New York, London and Ashgabat, in a quick succession in September.
The four member-countries of TAPI will provide the agreed set of their respective information, to be put in a package, by July 15 by ADB for dissemination, prior to the roadshows, among all those interested in participating in the pipeline consortium.
“Though the TAPI member-countries are keen to be minority partners in the consortium, we need one big company to act as a prime mover to take this project forward,” sources said.
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