TAPI Pipeline Project Limps Ahead With Ownership Largely Sorted Out


The Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline saw some cautious progress on Thursday when the four states involved agreed to share joint ownership of the project. The project’s fortunes have come under doubt in recent months, particularly after a disappointing steering committee meeting earlier this year (which Micha’el Tanchum wrote on for The Diplomat here and here). This week, the 22nd Steering Committee for the project met in the Turkmen capital of Ashgabat, making limited progress toward the realization of the pipeline, which is expected to cost $10 billion and considerably increase energy connectivity between Central and South Asia.

The Indian oil ministry clarified the outcome of the 22nd Steering Committee meeting, highlighting consensus around a Turkmen proposal:

Turkmenistan proposed that its state-owned company TurkmenGaz would lead the consortium for TAPI project with majority investment … All sides endorsed the Turkmen proposal. It was agreed that all sides would make investment in the project subject to techno-commercial viability, shareholders agreement and investment agreement.<

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The Turkmen proposal, while ensuring sustained interest among the four states involved the pipeline, does little to solve a major issue bedeviling progress on the pipeline. Specifically, given that no state-owned or private energy firms among the four states has the experience, interest, or capacity to operate a transnational pipeline, an outside firm’s participation remains critical to the eventual transition of this project from idea to reality. TurkmenGaz will now lead the TAPI consortium, but it’s still unclear how this will lead to the pipeline’s actual construction.

As Tanchum detailed for The Diplomat, Ashgabat was reluctant to agree to the terms that would have made France’s Total S.A. the consortium leader—namely, an equity stake in the country’s Galkynysh gas field, the second largest in the world. U.S. firms Chevron and ExxonMobil withdrew consideration due to similar concerns. it still remains possible that Russia’s Gazprom and China’s China National Petroleum Corporation (CNPC) could join the project as part of a parallel consortium (Tanchum discusses this in greater detail here).

The TAPI pipeline, according to officials from the states involved in the steering group process, is expected to reach a breakthrough this year, hopefully leading toward construction. Though widely seen as an idealized pipe dream (pardon the pun), TAPI’s participants have deep and enduring interests in the pipeline’s construction. For Turkmenistan, the ability to sell its gas to energy-starved Afghanistan, India, and Pakistan will increase revenues while hedging its reliance on Beijing as its top customer (Russia, meanwhile, is decreasing its imports from Turkmenistan). For Kabul, Islamabad, and New Delhi, Turkmen natural gas could fuel economic growth, though there are concerns about the cost of gas delivered via the pipeline.

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