With oil big boys not keen, will national cos move in?

Big boys of oil sector are hesitant to spearhead the construction and operation of the 1,800-km multi-billion dollar Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline. This is despite the project having political backing.

French energy firm Total was tipped to steer the pipeline project. However, multiple sources told BusinessLine that it is now hinting about its ‘non-availability’.

Indian officials associated with the project said that they have no formal communication on either Total’s availability or non-availability for the project.

The Petroleum & Natural Gas Ministry team is gearing up for early August meeting on the project in Ashgabat. Sources in the know said that multiple options for the network were expected to be discussed at the meeting.

In a worst case scenario, if there are no takers, the possibility of the state-owned companies of these countries (TAPI) involved in the project entering the fray, is not ruled out, another official added.

While those associated with the project say that “such projects do not happen in a day”, oil industry experts say “projects like this need international financial support, which is available after the investor has factored in all the risk elements. In this project, the biggest challenge is geo-politics.”

Besides, the political challenges in implementing the pipeline project, which will export up to 33 billion cubic metres of natural gas annually from giant gas field, Galkynysh in Turkmenistan, to Afghanistan, Pakistan, and India over 30 years, the other deterrent for some of the big players of the oil sector has been Ashgabat’s oil policy.

The players want equity participation in the gas field, but Turkmen authorities are clear that no equity participation in the upstream development of this field will be given, as it offers service contracts.

During Prime Minister Narendra Modi’s recent visit to Turkmenistan, the political leaders noted that cooperation in energy sector, especially TAPI pipeline project, forms a key pillar of economic engagement between the two countries.

The leaders reaffirmed their strong commitment towards timely implementation of this strategic project for the common benefit of people of the four countries and noted that the selection of the consortium leader for the project, will be finalised by September 1, 2015.

Asked whether the September first deadline to finalise the consortium leader is too ambitious, Narendra Taneja, National Convener, Energy Cell of Bharatiya Janata Party said, “the timing for pushing the project is just right and India is willing to take the risks…but, you should keep in mind that at the end of the day, gas is a commercial commodity and decisions are taken after factoring in all the risk elements. BJP is keen on the project as it also serves the socio-economic purpose.”

In November 2013, Asian Development Bank was appointed the transaction advisor for the TAPI gas pipeline project. Subsequently, the four state-owned companies of Turkmenistan (Turkmengas), Afghanistan (Afghan Gas Enterprise), Pakistan (Inter State Gas Systems (Private) Ltd), and India (GAIL (India) Ltd) formed a Special Purpose Vehicle for the project, TAPI Ltd.