TAPI GAS PIPELINE: FROM CONCEPT TO REALITY

As it is well known, an important aspect of Turkmenistan's energy strategy is the expansion of the geography of export routes for the supply of Turkmen energy to world markets, including through the creation of a multivariate transport infrastructure. In this area, large investment projects are being implemented, among them the construction of the Turkmenistan-Afghanistan-Pakistan-India gas pipeline (TAPI) occupies a special place. We asked the representative of the State Concern “Turkmengas” on the board of directors of “TAPI Pipeline Company Limited” Muhammetmyrad AMANOV how this important international project is going through with it.

Let me remind you that in 2010 the TAPI project got in the active phase by signing in Ashgabat a four-party intergovernmental agreement on this project. Then, from 2012 to 2016, the legal framework of the project was coherently refilled by the Agreements for the purchase and sale of natural gas with all buyers, joint-stock and investment agreements.

In 2013, the Governments of Turkmenistan, Afghanistan, Pakistan and India designated their state-owned gas companies to promote and invest in the TAPI project.

The project includes comprehensive works on the design, procurement, construction, operation and maintenance of the 1840 km pipeline from Turkmenistan to Afghanistan, Pakistan and India. It is envisaged that after full commissioning of TAPI, that within 30 years up to 33 billion cubic meters of natural gas per year will be exported.

This project can clearly be reckoned among a small number of international projects. It will have a stimulating effect on the sustainable development, social and economic growth of the countries of the region and will ensure their energy security. These factors, in turn, are the "pillars" on which the modern architecture of the energy space is held.

In a relatively short period of time, significant progress has been achieved in the implementation of the TAPI project, in particular, on key agreements such as the Agreement with Host Governments and the Agreement on the Transport of Natural Gas. A great impulse for the promotion of the project was given by the establishment of the consortium "TAPI Pipeline Company Limited" and subsequently the election of the State Concern "Turkmengas" as the leader of this consortium.

Let me remind you that the start of construction of TAPI was given in December 2015 in Mary region. Presidents of Turkmenistan and Afghanistan, high-ranking representatives of India and Pakistan took part in the solemn ceremony on the occasion of the welding of the first joint symbolic "golden link" of the new gas transportation artery. The laying of the 214-kilometer section of the gas pipeline in the territory of our country is carried out by the State Concern “Turkmengas”, and it is planned to complete all works at the end of 2018.

In October 2016, to finance the construction of the Turkmen part of the TAPI gas pipeline the Agreement of the Government of Turkmenistan with the Islamic Development Bank was signed. The document provides for the allocation of a credit in the amount of 700 million US dollars.

In November this year, in Riyadh, the regular meeting of the Intergovernmental Turkmen-Saudi Commission on Trade and Economic Cooperation with the participation of industry and energy leaders, as well as large companies of Saudi Arabia was held. During the meeting, issues of trade, economic and investment cooperation, including in the fuel and energy sector, were discussed, specific in several areas agreements were reached. In particular, the State Concern “Turkmengas” has signed an agreement with the Global Pipe Company for the delivery in 2018 of a large batch of pipe products intended for the construction of TAPI.

As you know, the resource base of TAPI at the initial stage will be the super huge gas field "Galkynysh". As part of the development of this field, the State Concern “Turkmengas” together with its foreign partners is doing a great job, aimed to provide "blue fuel" for TAPI at a high level.

I want to note other achievements. So, at the negotiation stage there are agreements on the project, which will be concluded with governments and state counterparts. Among them, the most important is the Agreement with the Governments of the host countries.

We have completed the tender process for the selection of contractors for detailed road surveys on the pipeline route. Key surveys, such as environmental and social impact assessment, and the development of a land allocation plan are already under implementation in the Afghan and Pakistani areas.

Preliminary design for the gas pipeline and all stations, which is better known as Front-End Engineering & Design, has been completed. The tender process of selection suppliers of equipment for long-term production - as a main pipe and large valves, as well as contractors for the construction of a linear part and stations for various purposes has been started.

Draft contracts, which will be concluded as a result of tenders, have been prepared. We do not expect long negotiations in view of the fact that the proposed contract scheme has been repeatedly accepted by the market and demonstrated its effectiveness and balance of interests of the parties. And last but not least, this is the fact that a team of advisers from  the companies - world leaders in their field has been assembled.

In general, all this means that the project is progressing in accordance with the schedule, in 2019 it is planned to start gas deliveries to TAPI.

- What support is provided for the construction of TAPI at the state level?

- Initially, it should be noted that Turkmenistan is the locomotive of the promotion of this project. Thanks to the initiative and personal guidance of the President of Turkmenistan, Gurbanguly Berdimuhamedov, the project has reached the current stage of development, namely, over the past few years it has been transformed from the concept into reality. Already in the near future, construction work is expected to begin in the territories of Afghanistan and Pakistan.

Undoubtedly, the governments of the participating countries fully support the TAPI gas pipeline project. There is a full-scale assistance to the activities of the consortium "TAPI Pipeline Company Limited" both at the level of shareholders, which in turn are state-owned gas companies, and at the level of state departments of the respective jurisdictions.

Representatives of the governments of Turkmenistan, Afghanistan, Pakistan and India work very closely and effectively. And this is confirmed by the fact that the TAPI project is extremely important for the development of the region's economy, primarily for the industrial sector, large and small businesses. Thus, local contractors will be involved in the delivery and construction work. The participating countries will receive a cheaper, more economical and environmentally friendly source of energy, as well as additional incomes from gas transit.

As President Gurbanguly Berdimuhamedov emphasized, in addition to the economic development of the region and the solution of vital social issues, the implementation of the TAPI project would help to strengthen peace and stability there. From this point of view the project is considered both by the participating countries, and by the world community.

In continuation of the topic, it is necessary to mention one more important and long-term partner of the project - the Asian Development Bank. ADB participates in the project from the very beginning and continues to provide all-round support to TAPI, including through the provision of soft loans. Thus, an agreement was reached between the Government of Afghanistan and ADB on financing the Afghan share capital in “TAPI Pipeline Company Limited”.

- What are the criteria for selecting consultants and contractors for project?

- First of all, this is the solid experience in the field of pipeline design, construction and operation, the introduction of the best world practices and standards into the project. Particular attention is paid to the environmental aspect. Choosing the route, we were guided by the principle of minimum impact on the environment. By technical complexity, the TAPI project can be put on a par with other international gas pipeline projects. In this regard, it is necessary to note the successful work of our consultants - the German company ILF and the British Allen & Overy.

- How the financing issues of the project is solved?

 - The State Bank for Foreign Economic Affairs of Turkmenistan and the SC “Turkmengas” have extensive experience in attracting investments in major international projects and, accordingly, working with various credit agencies and financial institutions. Among them - the Asian Development Bank and the Islamic Development Bank, export credit agencies and sovereign funds of various countries, as well as international commercial banks.

Taking into account the fact that the lion's share of the necessary capital investments is taken by the supply of goods and equipment of long-term production, export credit agencies can potentially play an important role in financing the project. In addition, the project parties unanimously confirm their commitment to the project and the obligation to provide their own capital in accordance with the shares of participation and agreements.

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