On February 23, 2018, the ceremony to mark the beginning of the construction of a 700-kilometer long Afghan section of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline was held in Herat, Afghanistan’s northwestern province. The inauguration event was attended by high-ranking government officials including President of Afghanistan Ashraf Ghani, President of Turkmenistan Gurbanguly Berdymukhammedov, Prime Minister of Pakistan Shahid Khaqan Abbasi, and Minister of State for External Affairs of India Shri Akbar. It is expected that once the 1,840-kilometer TAPI pipeline is completed by the beginning of 2020, it would transport 33 billion cubic meters (bcm) of natural gas annually from the Galkynysh field in Turkmenistan to Afghanistan, India and Pakistan for the next three decades. According to the Asian Development Bank, the official Transaction Advisor for the project, 5 bcm would go to Afghanistan while the rest would be consumed by India and Pakistan each buying around 14 bcm (ADB, 2016). The $10 billion project if realized would bring substantial benefits for the parties involved as it would help to diversify the energy markets for Turkmenistan that is heavily dependent on its gas exports to China, create income ranging from $500 million to $1 billion annually in transit fees for the cash strapped Afghan government and satisfy growing energy demands of Pakistan and India. However, significant barriers related to the financing difficulties and the provision of security along the proposed route are the hurdles that must be addressed before the first gas from Turkmenistan could reach India.
The planned pipeline would start from the Galkynysh giant gas field located in the Turkmenistan’s eastern Mary province, go through five southern Afghan provinces, then pass Quetta and Multan in Pakistan before reaching the state of Punjab in northern India. The TAPI had first been proposed in the early 1990s and enjoyed support of the United States as an alternative route easing access of the Central Asian energy to the world markets thus alleviating the region’s heavy dependence on the Russian transportation infrastructure (Foster, 2010). However, the takeover of power by Taliban in 1996 made the crossing of Afghanistan problematic significantly delaying the actual implementation of the project. TAPI made a decisive return when Turkmenistan started construction of its 214-kilometer long segment of the TAPI pipeline in December 2015. Therefore, the February 23, 2018 inauguration ceremony devoted to mark taking the pipeline from Turkmenistan further to Afghanistan represents a milestone in the implementation of the project. In its turn, Pakistan reportedly started initial works on its section of the project in early March of 2017 focusing on the route survey, detailed engineering and feasibility study (Tribune, 2017).
Turkmenistan as the sole supplier of gas counts on the successful realization of the project to diversify the market for its main export product. At present, Turkmenistan, a country that possesses one of the world’s largest natural gas reserves estimated at 13.4 trillion cubic meters, faces hard times in exporting its gas due to a sharp decrease in commodity prices and contract disputes with two of its major gas importers, Iran and Russia. Turkmenistan lost Russia and Iran as customers in the early 2016 and 2017, respectively. Currently, China is the only buyer of Turkmenistan’s gas in contrast to 2015 when roughly 60% of Turkmenistan’s gas exports went to China, while 40% was shared between Russia and Iran. Therefore, if the TAPI project is completed and reaches its full capacity it would create another large energy market for the Turkmen gas which would consume close to 35 bcm, the volume Turkmenistan exports to China annually.
Afghanistan, India, and Pakistan have all stated their commitment to the project despite the tensions that exist between them. Perhaps this rare show of cooperation observed between New Delhi and Islamabad comes from the need to resolve acute energy shortages, which negatively affect their economic prospects. According to the statistics, both Pakistan and India experience acute deficit in energy that stands at over 7,000 megawatts (Khetran, 2017). For instance, in Pakistan gas is widely used for electricity generation (almost 32%) leading to a severe domestic and industrial gas load shedding (Mahmood et al., 2013). Some of the solutions to the problem apart from TAPI are: the Iran-Pakistan-India (IPI) gas pipeline, and imports of Liquefied Natural Gas (LNG), particularly from Qatar. However, the withdrawal of India from the IPI project in 2009 and the ongoing row in the implementation of the Iran-Pakistan pipeline make TAPI and the LNG delivery the only available alternatives. For Afghanistan that has long suffered from the internal turmoil, a series of ambitious connectivity infrastructure projects such as the Lapis Lazuli railroad, the CASA-1000 power transmission line and the TAPI pipeline defines hopes for the reconstruction and industrialization held by its government and population (Anceschi, 2017). From this perspective, TAPI fits well into this discourse of development as it would provide hard currency revenues in the form of transit fees, create jobs for the population, and once the project is up and running Afghanistan would also gain access to energy to generate electricity and increase the current electrification rate from 20% to 33% (ADB, 2012).
On the other hand, the doubts over the prospects of actual implementation of the TAPI pipeline still remain, and they have mainly to do with security and financial concerns. In particular, the Afghan part of the pipeline goes through the Herat, Farah, Nimruz, Helmand and Kandahar provinces of Afghanistan which have a strong Taliban presence. Although the Taliban’s pledge to support the project it released in a statement the same day as the ground-breaking ceremony took place seems reassuring, experts are warning of potential dangers coming from different sources. In addition to Taliban, there are other armed groups active in northern and western Afghanistan including ISIS that following their near total defeat in Syria and Iraq found a new stronghold in Afghanistan where around 10,000 of its fighters are concentrated. According to Russian special envoy to Afghanistan Zamir Kabulov, the ISIS forces are strongest in the areas bordering Tajikistan and Turkmenistan (RT, 2017).
Apart from security concerns, there is still a question of financing, and, with an estimated cost of $10 billion, the realization of TAPI would require considerable investments which the operator of the project, state-owned Turkmengaz (holding an 85% stake in the TAPI Pipeline Company Construction Consortium), has found rather difficult to secure. So far it has managed to attract only $700 million from the Islamic Development Bank, while the other three participating states committed themselves to contributing only 5% (corresponding to their share in the consortium), or $500 million, each to the project. In effect, the remaining almost $8 billion is the sum that Turkmenistan has to invest in order to realize TAPI which raises doubts over its capacity to allocate this large amount. A number of reports indicate that currently Turkmenistan is exporting gas without making enough hard currency since China, the only buyer of the Turkmen gas, uses its monopolistic power to set the price below the market level at approximately $185 per 1,000 bcm. Moreover, part of these revenues are used to repay the country’s debts (‘debt for gas’ policy), which were received from China in 2011 and 2013 to develop the Galkynash gas field and build a gas transportation network (Central Asia-China pipeline). Falling revenues have led to the depreciation of the national currency by 19% in 2015, the budget deficit of 0.8% of GDP and the current account deficit of 18.5% that the country runs third year in a row (Tradingeconomics, 2018). Turkmenistan’s struggling economy not only threatens the construction of the entire 1 840-kilometer pipeline but also 214 kilometers running through its own territory.
At present, the information is limited on the progress made in constructing the Turkmen section of TAPI. Despite its officials claiming the progress, Turkmenistan’s strictly controlled media has shown no photographic evidence or any footage of TAPI’s construction, while no international journalists have been allowed anywhere near works making any independent assessment problematic. It is worth mentioning that the construction of the Turkmenistan–China gas pipeline (completed in 2009) in contrast enjoyed an extensive coverage. Turkmenistan’s economic crisis, combined with no footage indirectly proving TAPI’s construction, raises serious suspicions that no or very little progress is made since the initiation of works in December 2015.
Overall, the skepticism regarding the TAPI project related to financial and security concerns still remains even though its relevance and prospective benefits for the parties involved are well established. Given that none of the countries involved has so far done any construction with observers questioning if the Turkmen section has even got off the ground, the project, the completion of which is scheduled for 2020, is likely to be postponed if not discontinued.
References:
ADB. (2016). TAPI Gas Pipline. Asian Development Bank (infographics). Available at: https://www.adb.org/news/infographics/tapi-gas-pipeline. Accessed on: 01.03.2018.
J. Foster. (2010). Afghanistan, the TAPI Pipline, and Energy Geopolitics. Journal of Energy Security. Available at:
http://www.ensec.org/index.php?option=com_content&view=article&id=233:afghanistan-the-tapi-pipeline-and-energy-geopolitics&cati. Accessed on: 02.03.2018.
Tribune. (2017). Work on TAPI pipeline to start in Pakistan today. Available at: https://tribune.com.pk/story/1343211/work-tapi-pipeline-start-pakistan-today/. Accessed on: 07.03.2018.
S. Khetran. (2017). Turkmenistan-Afghanistan-Pakistan-India (TAPI) GasPipeline. Institute of Strategic Studies, Issue Brief. Available at: http://webcache.googleusercontent.com/search?q=cache:NdgUSjjYQ8cJ:issi.org.pk/wp-content/uploads/2017/02/Final_IB_Khetran_dated_16-2-2017.pdf+&cd=1&hl=en&ct=clnk&gl=kz. Accessed on: 12.03.2018.
A. Mahmood, N. Javaid, A. Zafar, R. Ali Riaz, S. Ahmed and S. Razzaq. (2013). Pakistan’s overall energy potential assessment, comparison of LNG, TAPI and IPI gas projects. Renewable and Sustainable Energy Reviews, [e-journal], (31):329-340. Journal homepage: www.elsevier.com/locate/rser. Accessed on: 12.03.2018.
L. Anceschi. (2017). Turkmenistan and the virtual politics of Eurasian energy: the case of the TAPI pipeline project, Central Asian Survey, [e-journal], 36(4): 409-429. Available at: http://dx.doi.org/10.1080/02634937.2017.1391747. Accessed on: 12.03.2018.
ADB. (2012). Turkmenistan–Afghanistan–Pakistan–India Natural Gas Pipeline Project, Phase 3. Asian Development Bank, Technical Assistance Report. Available at: https://www.adb.org/sites/default/files/project-document/73061/44463-013-reg-tar.pdf. Accessed on: 01.03.2018.
RT. (2017). ISIS has over 10,000 fighters in Afghanistan, more arriving from Syria & Iraq – Moscow. Available at: https://www.rt.com/news/414048-afghanistan-isis-numbers-rise/. Accessed on: 12.03.2018.
Tradingeconomics. (2018). Turkmenistan Government Budget. Available at: https://tradingeconomics.com/turkmenistan/government-budget. Accessed on: 15.03.2018.
Note: The views expressed in this blog are the author’s own and do not necessarily reflect the Institute’s editorial policy.