ISLAMABAD (Reuters) - A long-delayed pipeline project from Turkmenistan to Pakistan and India via Afghanistan is in the final stages of financing, and investor roadshows are due to be held next month, a Pakistani official involved in the project said on Friday.
Originating at the giant Galkynysh gas field in Turkmenistan, the $10 billion TAPI (Turkmenistan, Afghanistan, Pakistan and India) pipeline, which involves the four countries’ own energy companies, would carry 33 billion cubic metres (bcm) of gas a year.
But difficulties in obtaining financing for the project and concerns about security in Afghanistan, where Islamist Taliban insurgents control swathes of the territory earmarked as the pipeline route, have led to lengthy delays.
Mobin Saulat, head of Pakistan’s state-owned Inter State Gas Systems (ISGS), told Reuters there was “significant progress” with the TAPI project and that investor roadshows to raise funds are planned for November.
“There will be roadshows soon in all the major financial hubs,” he said. “The project’s planned commissioning is 2020 and I think we are very much on target.”
Over the decades, international oil giants have expressed interest in the proposed pipeline, but the region’s complex geopolitics and contract disagreements meant none ever fully committed.
A total $4 billion for the pipeline has been put forward by the four TAPI countries, Saulat said. Pakistan’s ISGS has a 5 percent stake in the 1,814 km (1,127 mile) pipeline project.
Saulat said the Asian Development Bank had shown interest in funding some of the project and there was “huge interest shown and commitments made from some of the major suppliers who said they would be able to get supplier credit.”
Turkmenistan, which sits on the world’s fourth-largest gas reserves, last December started building its section of the pipeline, designed to ease its dependence on Russia and China, but the three other countries have yet to begin work.
Saulat said selecting project management consultants for TAPI was in the “final stages” and TurkmenGaz, Turkmenistan’s national gas company, was in advanced talks with suppliers about the purchase of giant compressors, needed to funnel gas down the route.
TAPI is one of three main pipeline projects aimed at securing long-term energy supplies to Pakistan, where chronic energy shortages are proving a major drag on growth.
The other two planned projects include a $2 billion Russian-funded North-South liquefied natural gas (LNG) pipeline from the coast city of Karachi to Pakistan’s industrial heartlands in Punjab, and a Chinese-funded LNG pipeline starting from a proposed LNG terminal at the port city of Gwadar in Baluchistan.
Saulat said Pakistan expected to finalise contracts for the (LNG) terminal at Gwadar port in November and the final deal for the Gwadar-Nawabshah pipeline should be finished this month.
“We have had a number of sessions with the Chinese team, so we see an immediate kick-off after we sign the contracts.”
China has agreed to fund 85 percent of the port and pipeline project and Pakistan will pay the rest, Saulat said. Officials expect the terminal and pipeline to be complete in mid-2018, and local media put the cost of the deals at about $2 billion.
Saulat, who is also managing director of newly-formed Pakistan LNG, said Azerbaijan’s state energy company SOCAR had approached the country to supply it with LNG gas.
Saulat said the approach was linked to Pakistan’s plans to issue two international LNG tenders for 750,000 tonnes per year, most likely due before the end of 2016.
“Their trading wing is actually interested, but again, it’s one of the players, we have to follow the process.”
Reporting by Drazen Jorgic; Editing by Mike Collett-White