It's not gas pricing, security concerns or project financing, which is troubling the member countries of the ambitious Turkeminstan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline project. They are more worried about who will build the pipeline.
At the recent road shows for inviting players to participate in the project, the ExxonMobils and Chevrons of the oil sector indicated that they were keen on upstream participation in Turkmenistan’s South Yolotan – Osman gas fields, which will be a source for the TAPI project, in order to build the network.
But, the Turkmen authorities are clear that no equity participation in the upstream development of this giant field, recently renamed Galkynysh, could be considered, according to a senior oil Ministry official.
According to their present Government policy, Turkmen offer service contracts for this purpose. 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.
However, in a production sharing agreement (PSA) the company concerned takes a 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.
A senior Oil Ministry official said, “We are having a steering committee meeting in November, were the member countries will try to find a way out.”
Interestingly, TAPI is a project which is endorsed by the US, unlike the Iran-Pakistan-India pipeline.