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TAPI Gas Pipeline: From Idea to Reality

TAPI Gas Pipeline: From Idea to Reality
As is 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 which the construction of the Turkmenistan-
Afghanistan-Pakistan- India gas pipeline (TAPI) occupies a special place. We asked the
representative of the State Concern Turkmengaz on the board of directors of the company
TAPI Pipeline Company Limited Muhammetmyrad Amanov about the progress of this project,
which is of international importance.
– I recall that the TAPI project entered into an active phase in 2010, when a quadrilateral
intergovernmental agreement on this project was signed in Ashgabat. Then, from 2012 to 2016,
the legal framework of the project was consistently supplemented by the Agreements for the
purchase and sale of natural gas with all buyers, the Joint Stock and Investment Agreements.
In 2013, the Governments of Turkmenistan, Afghanistan, Pakistan and India designated
respectively their state-owned gas companies Turkmengaz, the Afghan gas company, Inter State
Gas Systems Limited  (Pakistan), and GAIL (India) Limited to promote and invest in the TAPI
project.
The project includes comprehensive works on the design, procurement, construction, operation
and maintenance of the pipeline with a length of 1840 km from Turkmenistan to Afghanistan,
Pakistan and India. It is envisaged that after full commissioning of TAPI, up to 33 billion cubic
meters of natural gas per year will be exported for 30 years.
This project can clearly be counted 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 “columns” 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 powerful impetus to the
project’s progress was given with the establishment of the consortium “TAPI Pipeline Company
Limited” and subsequently the choice of the State Concern “Turkmengaz” as the leader of this
consortium.
Let me remind you that the start of construction of TAPI was given in December 2015 in Mary
province. Presidents of Turkmenistan and Afghanistan, Vice President of India and Prime
Minister of Pakistan took part in the solemn ceremony on the occasion of the welding of the first
joint – the symbolic “golden link” – of the new gas transportation artery. The laying of the 214-
kilometer section of the gas main in the territory of our country is carried out by the State
Concern “Turkmengaz”; it is planned to fully complete all works by the end of 2018.

In October 2016, the Agreement of the Government of Turkmenistan with the Islamic
Development Bank was signed to finance the construction of the Turkmen part of the TAPI gas
pipeline. The document provides for the allocation of a loan 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 was held with the participation of industry and
energy leaders, as well as large companies of Saudi Arabia. During the meeting, issues of trade,
economic and investment cooperation were discussed, including in the fuel and energy sector,
specific agreements were reached in several areas. In particular, the State Concern Turkmengaz
has signed an agreement with 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 largest field “Galkynysh”.
As part of the development of this field, the State Concern Turkmengaz together with its foreign
partners is doing a great job, called to provide a high level of “blue fuel” TAPI.
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 research – 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 has begun to select suppliers of long-lasting equipment- like the main pipe
and large valves, as well as contractors for the construction of a linear part and stations for
various purposes.
Draft contracts have been prepared, which will be concluded as a result of tenders. 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 the last, but not least, is that a team of advisers has been assembled among the
companies – world leaders in their field.
In general, all this means that the project is progressing in accordance with the schedule; in 2019
it is scheduled 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 leadership of the President of Turkmenistan

Gurbanguly Berdimuhamedov, the project has reached the current stage of development, namely,
over the past ten years it has been embodied from the idea 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 an all-round 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, and
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 revenues from gas transit.
As esteemed President of Turkmenistan Gurbanguly Berdimuhamedov emphasizes, in addition
to the economic development of the region, the solution of vital social issues, the implementation
of the TAPI project will help to strengthen peace and stability here. In this context, the project is
considered both by the participating countries, and by the world community as a whole.
In continuation of the topic, it is necessary to note one more important and long-term partner of
the project – the Asian Development Bank. ADB is participating 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 part of the share capital in “TAPI Pipeline Company Limited”.
– What are the criteria for selecting project consultants and contractors?
-First of all, this is the presence of solid experience in the field of pipeline design, construction
and operation, the introduction of the best world practices and standards into the draft. Particular
attention is paid to the environmental aspect. When 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 to solve the financing of the project?
– The State Bank for Foreign Economic Affairs of Turkmenistan and Turkmengaz have
extensive experience in attracting investments in large international projects and, accordingly,
are working with various credit agencies and financial institutions. These include the Asian
Development Bank and the Islamic Development Bank, export credit agencies and sovereign
funds of various countries; as well as international commercial banks.

Considering the fact that the “lion’s” share of the necessary capital investments is 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 parties to the project unanimously
reaffirm their commitment to the project and the obligation to provide their own capital,
according to the shares of participation and arrangements.
 
Ussa Ussaev, editor-in- chief of the newspaper “Nebit-gaz”.

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