Can the TAPI Pipeline Be Any More Than a Pipe Dream?
Image Credit: Flickr/hhoyer

Can the TAPI Pipeline Be Any More Than a Pipe Dream?

 
 

The Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project has long been derided as a pipedream. And it’s easy to understand why.

Consider, first, the immense security obstacles. The pipeline would have to pass through highly hostile terrain. It would enter Afghanistan from Turkmenistan and extend across Helmand Province, large parts of which are falling to the Taliban, before continuing eastward and arriving in Kandahar, the Taliban’s birthplace and site of a recent airport attack that killed several dozen people.

Eventually the pipeline would spill into Baluchistan, Pakistan, home to a long-running separatist insurgency driven, in part, by grievances about large-scale natural-resource exploitation. The pipeline would then continue eastward to the southern parts of Pakistan’s Punjab Province—a traditional bastion for anti-India terror groups. Those still there would not look fondly upon a project delivering precious energy to the nation they wish to destroy.

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Then there are the funding challenges. The project is expected to cost about $10 billion, with projected overrun costs accounting for at least another $4 to $5 billion (not to mention the additional costs of providing security to construction workers in Afghanistan and Pakistan). The Asian Development Fund is expected to cover a small portion of the costs, though the bulk of the financing will apparently be left to a yet-to-be identified private partner. Previous candidates—including Chevron and Exxon—have backed out after Turkmenistan refused to grant them equity stakes in the project. Another deep-pocketed potential investor—China—appears a non-option as well. Beijing is unlikely to fund a project championed so vociferously by Washington. This means that the new Asian Infrastructure Investment Bank (AIIB), despite some media reports to the contrary, probably won’t provide support either, given that China is AIIB’s largest shareholder.

This doesn’t even get to the matter of two sworn enemies, India and Pakistan, somehow partnering on a very deep level. It’s hard to imagine these two bitter rivals mustering sufficiently large repositories of goodwill to sustain such cooperation.

And yet, despite all this, last weekend, seemingly out of the blue, the four TAPI countries held a groundbreaking ceremony in Turkmenistan. They vow to formally launch operations by 2019.

So what gives?

Some observers may take a somewhat conspiratorial view, and point to convenient timing. Last week, a regional security conference on Afghanistan, held in Islamabad, yielded some major diplomatic breakthroughs. The Indians and Pakistanis agreed to resume their comprehensive dialogue, which had been suspended since the 2008 terror attacks in Mumbai. The Afghans and Pakistanis pledged to formally resume efforts to restart a reconciliation process between Kabul and the Afghan Taliban.

Perhaps, some may argue, the TAPI countries decided to capitalize on this sudden détente by hastily scheduling a purely symbolic ceremony that would attest to the newfound goodwill harbored by a notoriously fractious and poorly integrated region.

This theory doesn’t hold much water, however, given that the groundbreaking ceremony was planned well in advance. In fact, the groundbreaking even coincided with Turkmenistan’s 20th neutrality day celebrations–a big deal for Ashgabat.

Others may contend that Washington pressured the TAPI states to hold the ceremony, regardless of the progress of the project. The United States has championed the pipeline since the 1990s, during the era of Taliban rule in Afghanistan. The U.S. oil firm Unocal held negotiations with the Taliban over the pipeline in 1997. Back in 2002, Pakistani journalist Hamid Mir claimed that then-Taliban supreme leader Mullah Omar told him in a 1996 interview that U.S. diplomats had visited Omar and said, “’You cooperate with us by assisting the American oil company and we will cooperate with you.”

It’s hard to believe, however, that the TAPI states would agree to a groundbreaking ceremony because of U.S. pressure alone.

The most credible explanation is that the four TAPI countries have in fact been making slow but genuine progress on this project, and remain dedicated to seeing it through—because they understand the soaring benefits, and especially for the three energy-starved countries that would receive the gas.

For Afghanistan, in addition to the energy benefits, the economic dividends would be tremendous. The pipeline would boost employment and create new markets—essential outcomes for a nation struggling to find new sources of growth amid the receding of a once-flourishing war economy. In a nation where poppy growth is seen as one of the most profitable industries, this shouldn’t be taken lightly.

For Pakistan, the energy advantages alone are tantalizing. The country faces chronic energy shortages, with power deficits that have approached 9,000 megawatts. Its strong dependence on foreign hydrocarbons is unsustainable; recent measures to exploit untouched indigenous coal reserves have stalled; and scale and costs issues constrain efforts to serve baseline demand with renewables. Additionally, a proposed gas pipeline with Iran—which was once seen as a somewhat more realistic prospect than TAPI—has failed to materialize.

TAPI is envisioned to send nearly 40 million standard cubic meters of gas per day (mmscmd) into Pakistan—a bonanza for a nation that has suffered from record gas shortages in recent years.

For India, the benefits of TAPI are both energy-related and geopolitical. Like Pakistan, India faces immense power shortfalls that cannot be addressed by its current energy mix. The nearly 40 mmscmd of gas it would receive would go a long way toward addressing its own sizable electricity deficits, which have approached 8,000 MW. It would also compensate for what appears to be a deal that won’t happen—a natural gas pipeline with Russia, a possibility dangled by Moscow in recent months.

The TAPI pipeline would also help serve a key Indian regional interest—securing better access to energy-rich Central Asia. This is a region India has long wanted to engage (and where China has already carved out a major presence), but has struggled to do so due to geographic constraints and to Pakistan’s unwillingness to grant India transit rights to Central Asia (via Afghanistan). New Delhi also hopes to facilitate access to Central Asia by financing the construction of a port in Chabahar, Iran. This project, however, can only be completed after the United States has removed sanctions on Iran—and that will only happen once the U.S.-Iran nuclear deal is ratified (and even then the sanctions removal process will likely be slow).

Can TAPI truly take off? It’s not totally out of the question. If the funding can be secured from some combination of international financial institutions and private partners; if sufficient personnel (and funds) can be obtained to provide security along the perilous pipeline route (and if a deal can somehow be struck with the Taliban to refrain from attacks along the route); and if India and Pakistan can bury the hatchet for the sake of a deal that serves both of their national interests—then the “pipedream” could end up coming true.

Ultimately, if you can get a critical mass of key stakeholders to see the pipeline as a high-risk, high-rewards proposition, then you might just pull it off.

However, these are a whole lot of gigantic “ifs.” And, unfortunately, at the end of the day, perhaps too many.

Michael Kugelman is the senior associate for South and Southeast Asia at the Woodrow Wilson Center, a Washington, D.C.-based think tank.
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