‘India will pay the most for TAPI gas’
Asim Hussain is 58 and adviser to the Prime Minister of Pakistan on petroleum and natural gas. He was in India recently for the $7.2 billion tri-nation tapi gas pipeline talks. He spoke to Iftikhar Gilani on the future of S.Asian energy. Edited excerpts:
How do we make energy available to the energy-starved South Asia?
Economic growth in South Asia is phenomenal. To sustain this growth and quality of life, we need energy. Our own sources of energy are limited. So there is a great demand and it is a challenge for governments to be self-reliant, invest in energy resources and transport energy from energy-rich countries to energy-starved regions. Pakistan has sources of natural gas in Baluchistan but they are not enough. We are investing in hydro sources, coal and gas.
What is the progress on the Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline?
We have decided to conclude the Gas Supply Purchase Agreement (GPSA) by July 31, 2011. Thereafter, we will appoint an administrator and a consortium for who the arrangements will be finalised by 2013. Our ambition is to complete this pipeline by 2016. A few steps remain and they will be sorted out satisfactorily. We are meeting again in Afghanistan on June 12. The New Delhi meeting has shown that the four countries are equally enthusiastic about and absolutely committed to the TAPI pipeline. It will be a pipeline of peace, progress and friendship among these countries.
As far as we understand, the other pipeline project, Iran-Pakistan-India (IPI), didn’t happen because of the high prices quoted by the Iranians and also due to security concerns. What makes you so confident that this pipeline will go through?
While discussing the IPI, we did not reach the stage you mention. At least these issues were not conveyed to Pakistan. Iran has already constructed a pipeline until the Pakistan border. The gas is near the border. We are going to take off and start building our pipeline now. Negotiations with companies and consortiums are under progress. We have appointed a consultant and hopefully we will start construction of the pipeline soon.
How significant is the TAPI gas pipeline for Pakistan?
It is a very important pipeline. It will not completely satisfy the requirements of any country but it will definitely help towards energy security of the countries involved. Our gas production is 4BCF and this pipeline can manage 1.4BCF. It will add another 25 per cent to our production. Pakistan will get energy and 1.3BCF, so our demands will be addressed. The South Yoloten-Osman field in Turkmenistan has huge recoverable reserves of 4-13 tCK to satisfy the demands of our countries for the contract period of 25 years and beyond.
What will be the pricing mechanism for the Turkmenistan gas?
We had consensus that the price cannot obviously be more than the fuel oil. It will be linked in such a way that it satisfies the needs of the buyer and the seller. It has to be reasonable and acceptable to all parties. The important thing right now is that the GSPA will be signed. It will determine the price. The last date for this is July 15. By the grace of god, we should be able to sign the GSPA by July 31. We have a joint strategy with India on purchase and pricing of gas.
So far it has emerged that Turkmenistan will sell gas on their border. After that there would be an add-on transit fee and another add-on cost of the pipeline. Since India is last in the line, it will spend more than the others. The project cost is approximately $7.2 billion. The major investment will come from India. We have not yet come to the transit fee. First, we need to know the price of gas. All parties have an idea but we cannot ask for something so ridiculous that negotiations will break down. We are discussing a price mechanism for the next 25 years.
Regarding security concerns, Afghanistan and Pakistan are passing through a critical phase.
We are looking at the regions the pipeline is to pass through and the security concerns there. The transit country will have to take responsibility of the safety and security of the pipeline. But things are not so bad. Terrorism happens in every country and Pakistan is in the midst of a major war. I hope we will tide over it soon. By that time, this pipeline would be commissioned and we would be rid of the security problem.
Are you upset that India almost withdrew from the IPI?
It is for India to decide if they want to come in. The option is open and it depends on the way you look at it. Pakistan is going ahead. The gas in IPI and TAPI will first come to us and then go to India. It is in our interest to keep the pipelines secure. If India wants to join the pipeline transit through Pakistan, it should not be a problem. If there are no security issues with the Turkmenistan pipeline, which is also transiting through Pakistan, why is it being raised with the IPI? It’s like a crisscross of pipelines from one country to another. This is the future of the world. We are expecting Iranian gas to reach us by 2014.
Reports say China will join the IPI project after India’s withdrawal.
If someone wants to finance, build and be the contractor, we are open to it. There will be an international tender. The Chinese are interested in laying and constructing the pipeline. So we will look at it.
India has offered to export petroleum projects to Pakistan but your country puts them projects in the negative list, making trade difficult.
India mentioned this in the recently concluded commerce secretary talks. We use 3 lakh barrels a day of petrol and diesel. Of this, 70,000 barrels are produced locally and we import the rest. Petroleum products in Pakistan are cheaper than in India. Our prices are 20-25 per cent lower than yours. It should make economic sense to us.
Iftikhar Gilani is a Special Correspondent with Tehelka.com.